The government is taking decisive steps to increase private sector participation in the Electricity Company of Ghana (ECG) as part of a comprehensive reform aimed at stabilizing the sector's finances and ensuring its sustainability over the long term.

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At the recent IMF/World Bank meetings, Finance Minister Dr. Mohammed Amin Adam emphasized the urgency of these reforms, declaring that the energy sector’s annual deficit of $1.2 billion is “not acceptable.”

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"Funds that should be allocated to essential services like healthcare and education are being diverted to cover losses in a sector that should ideally attract market-based solutions.”

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Dr Adam stated that restoring investor trust is crucial, noting, “People have lost confidence in our ability to manage the energy sector due to financial issues.”

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To enhance the financial stability of the government is introducing the "cash waterfall" mechanism, which aims to ensure equitable revenue distribution across the energy value chain.

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Finance Minister Dr. Mohammed Amin Adam emphasized the importance of restoring investor confidence, stating,

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Recent negotiations with IPPs, including Sunon Asogli—whose 560MW plant was temporarily shut down due to a $259 million payment dispute—indicate progress, though challenges persist.

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Dr. Adam reassured the public that power supply has not been affected, saying, “If one plant shuts down and the others continue to operate, it simply means that we have enough to supply our people.”

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Furthermore, new agreements have already been signed with Cenit and AKSA, two of the six IPPs involved in the restructuring discussions. These agreements do not require parliamentary approval, facilitating a smoother path for operational continuity.

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Negotiations with Sunon Asogli have encountered challenges, particularly regarding the company's request for an extra $30 million in payment, which the government has declined.

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This setback underscores the complexities of the discussions as the government seeks to stabilize the energy sector while managing its financial commitments to IPPs.

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“While we initially agreed to a $30 million one-off payment, Sunon Asogli later demanded another $30 million. This was not part of our settlement terms,” Dr Adam stated.

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He firmly stated that no funds would be disbursed until the agreement is finalized. Discussions are also ongoing with other Independent Power Producers (IPPs) such as Karpowership.

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However, their recent request for an extra $70 million was also rejected by Dr. Adam, who emphasized the government's dedication to prudent financial management.

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“We have to negotiate and sign before I make any payment. Ghana is not just a street-country,” he declared.

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Pending agreements with Cenpower and Amandi Energy are awaiting ratification by Parliament. Dr. Adam has urged Parliament to reconvene and approve these essential reforms.

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“This is one of the effects the suspension has on government business because we were expecting parliament to approve these renegotiated agreements.”

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Through these reforms, the government aims to restore trust, stabilize the energy sector, and secure Ghana's energy infrastructure for its long-term objectives.

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