Duncan Amoah, executive director of the Chamber of Petroleum Consumers of Ghana (COPEC), said the real challenges facing the power sector were not being addressed.
He cited financial problems as the real cause of the power problem.
Speaking on TV3’s Key Points on Saturday, March 30, he pointed out that there was a shortfall in the amount collected by the Electricity Company of Ghana (ECG) from electricity sales.
“If we don’t address the real problem, the problem will keep coming back, the real problem is the financial problem. There is a funding gap between what ECG collects and what we produce. .
Any government that succeeds Akufo-Addo, whether it is another NPP government or the NDC, will face difficult challenges similar to those we experienced during the Mahama era. ”
Meanwhile, ECG has petitioned the Public Utility Regulatory Commission (PURC) to consider introducing a foreign exchange (foreign exchange) loss item into the gross revenue requirements approved by the commission.
According to the electricity distribution company, foreign exchange losses are putting a heavy financial burden on the company.
“Exchange losses have become a significant economic loss for ECG. ECG’s position is that the issue of foreign exchange losses has been consistently addressed by the PURC by including it in the tariffs approved by the ECG Committee. A permanent solution to the problem of exchange losses would come in the form of introducing an item for exchange losses into the gross revenue requirements approved by the European Commission for ECGs. is the view of ECG,” said the ECG Managing Director. In a letter dated March 27, 2024 to the PURC Director-General, Mr. Samuel Dubik Mahama of the Ghana Electricity Company wrote:
“This will eliminate the problem of debt accumulation in this sector, especially from the ECG side,” he said.
The letter was in response to the PURC’s order to pay all prescribed and allocated toll revenues under the Cash Waterfall Mechanism (CWM) to ensure the financial health of the industry. .
The ECG MD further stated that “Several challenges related to the implementation of CWM were raised by ECG and approved by the CWM Implementation Committee on March 26, 2024.As a result, ECG will now fully comply with the CWM approval model. I will do so,” he wrote.
The ECG MD elaborated on some of the issues he raised with the implementation committee members:
a) Treatment of initial electricity as a Tier 1 beneficiary
The inclusion of Early Power in Tier 1 payments is based on the fact that ECG has a Take or Pay PPA with Early Power. In addition, Early Power generated 77.7 GWh of electricity worth USD 5 million in December 2023 and January 2024, but this bill is due and demand notices to that effect are not available. delivered to his ECG. ECG’s position is that early powers should be given similar treatment to avoid accumulating debt, as is done for all other IPPs.
b) Treatment of WAPCo
The inclusion of WAPCo in Tier 1 payments is based on two directives issued by the Minister of Energy. First, WAPCo must be included in Tier 1 payments. Payments to WAPCo must be made directly to WAPCo in U.S. dollars. WAPCo’s current account details at ECG are USD accounts.
c) Loan repayment to Bui Power Corporation and Ghana National Gas Company
please remember. The loan was contracted by Bui Electric Power Company and Ghana National Gas Company to address pressing financial challenges facing both companies. By agreement between the two institutions, these loans were converted to ECG to pay both principal and interest on time. The total contract value for both agencies is GHS 250 million (GHS 150 million for Bui Electricity Corporation and GHS 100 million for Ghana Gas Ghana Limited). “
Mr Mahama further explained that “in fulfilling the terms of the loan agreement, ECG has since made on-time payments and this fact can be confirmed by the beneficiaries.” It is therefore wise to address the issue of loan repayment as part of the CWM payment to avoid ECG finding itself in a precarious financial position. If these issues are not addressed, ECG is very likely to lead to debt accumulation. There is no other source of income other than to pay both principal and interest. ”