The Executive Director of the Africa Center for Energy Policy, ACEP, Ben Boakye, has explained that the country’s current energy challenges resulting in a frequent power outage is due to the sector’s high indebtedness.
According to him, the many power contracts and agreements entered into in the past, had left the sector in dire financial challenges making it difficult to operate efficiently.
Speaking on Citi TV’s Point of View, Ben Boakye said for past few years, governments have been consistent in increasing debts to the sector due to their failure to properly assess proposed contractual agreements before entering into them.
“The power sector is living on steroids because the fundamentals haven’t shifted much. We had a crisis and moving out of the crisis we were just signing PPAs, contracts without a careful projection of what the real demand is. If we have excess beyond what we need, that becomes a debt on us. We kept signing and now we have the PPAs maturing,” he said.
He indicated that the Electricity Company of Ghana (ECG) was the most indebted agency within the sector with a debt of almost Ghc1 billion as of July 2018.
“We have to address the fundamental cause. The power sector is on steroids because we haven’t stopped creating the debts. If you check ECG’s operation for 2018, documents I’ve sighted showed that first quarter of 2018, they made a loss of almost Ghc1 billion. If they are making losses, they are not able to pay. and if they are unable to pay then the generator will have to call on the one who owns the contract that is government and government will have to get money come and pay. So if we don’t solve that problem then we’ll have to use our taxes at a point to pay the generators.
There are renewed conversations on the state of the country’s energy sector following recent power cuts just as the over 2-year long power challenges experienced some years ago popularly known as dumsor.
The situation has seen some civil society organizations criticize the government for poorly handling the situation.
There have been arguments that the situation is due to mismanagement of financial resources by the government leading to huge debts and its inability to pay suppliers.
But various government officials including the Energy Minister, John Peter Amewu, had denied the claims of financial challenges until Monday when the Minister admitted that there was some financial bottleneck regarding the West Africa Gas Pipeline it needed to address among other challenges to ensure uninterrupted power supply.
A minority member of the Energy Committee of Parliament, Adams Mutawakilu said the challenges were due to liquidity issues but the government said that was untrue until Monday when it made a U-turn on its stance.
The Energy Minister, John Peter Amewu at a press conference conceded that there were some financial issues that delayed processes to resolve the power challenge.
“Our major challenge has been the incomplete reverse flow project to flow gas from the West to the East. We had to fast-track it through a by-pass which has been completed, but not connected to the West African Gas Pipeline yet. This is because WAGPA has not come out with the tariff for the reverse flow, and WAPCO will not sign the Gas Transportation Agreement (GTA) without a tariff.
WAPCO wants to charge US $3.2 MMBtu, whilst we want to pay US$1 MMBtu.”
“[The new amount] will now be approved by the Committee of Ministers of WAGP on 30th November, 2018, that is, coming Friday, to pave the way for the signing of the GTA, to allow for the connection of the by-pass….This will ensure 60mmscfd can flow from the West to the East until the reverse flow project is completed.”
Mr. Amewu, however, stressed that the challenges of Ghana’s power supply and the power cuts citizens suffered are now under control.
–
By: Jonas Nyabor | citinewsroom.com | Ghana