Juba power plant to cease its operations

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Juba power plant to cease its operations

Juba power plant in South Sudan is set to cease its operations following a notice issued by Ezra Construction and Development Group (ECDG), which generates and supplies Juba city with electricity. Ezra said in a statement that it will cease operating its power plant in the next few days, in pursuit of delayed US Dollars payment from the government of South Sudan.

“Ezra Construction and Development Group (ECDG), hereby gives notice that the Juba power plant will cease to operate in the next few days. On 31 March 2021, the company had notified Hon. Peter Marcello Nasir Jelenge, Minister of Energy and Dams, that it would be forced to take this drastic action unless the government of the Republic of South Sudan urgently made the US Dollar payment as set out in the Power Purchase Agreements (PPA) signed on 16 August 2017,” the ECDG statement read.

ECDG has built and is operating a power plant for the national grid of South Sudan. The company  made an extensive investment by the end of 2019 to make available over 230,000,000 kWh by the end of 2020. Over 64,000,000 kWh was consumed in 2020 alone by over 20,000 customers marking a successful inaugural year.

Ezra produces bulk energy supplied to JEDCO, which in turn distributes electricity to customers in Juba, who pay in South Sudanese Pounds. The Government, through both the Ministry of Energy and Dams, and Ministry of Finance and Economic Planning, is contractually obliged to convert the SSP received by JEDCO into US Dollars to pay Ezra for the electricity it generates.

“Despite ensuring the collection of electricity tariff which is made in SSP through our joint efforts in JEDCO from customers, payments due to Ezra as per the contract signed in August 2017 have not been made on time despite numerous attempts to address the situation. ECDG has continued to supply electricity despite continued failure to make contractually required US Dollar payments,” the statement read.

ECDG had extended the operation of the power plant despite the excessive delinquent amount with the explicit promise that US $3 million would be transferred every month by central bank both in person, in the presence of different stakeholders and also publicly on the Juba Monitor dated 23rd of January 2021.

READ: Production of refined oil begins at Bentu Oil Refinery in South Sudan

Ezra power plant is built with capital expenditure from investors and loans from financiers. The company had managed to secure a one-year grace period from investors, which expired in January, 2021. Ezra now faces additional US Dollar costs, both for fuel and related products required to run the power plant purchases, and capital expenditure obligations from building and maintaining the plant.

According to Ezra, the Ministry of Energy and Dams has failed to make over 85% of payments over the last 15 months. “Some of the payments have been delayed for over 400 days.”

Currently, most of the power plant’s production inputs are imported and tied to Foreign Exchange. ECDG is now investing in resources that reduce foreign exchange reliance and is working to source local services and inputs.

Ezra has however reaffirmed its commitment to invest in the development and prosperity of South Sudan, and plans to expand additional renewable capacity. The company hopes to find an amicable and permanent solution, as it continues to meet customer demands.

“ECDG is  urgently requesting relief from the Government and is appealing for a collaborative effort to find a permanent solution to the forex convertibility problem that consistently plagues the partnership.”

Meanwhile, the African Development Bank Group, which funded the USD 38 million expansion and rehabilitation of the electricity distribution network in Juba, said in a press release that it was not involved in any decision-making regarding the planned power shedding in Juba.

The Bank funded the USD 38 million expansion and rehabilitation of the electricity distribution network in Juba. The project was primarily financed through a grant. It was implemented by the South Sudan Electricity Corporation, which is the power utility created by the Government. The Corporation falls under South Sudan’s Ministry of Energy and Dams.