A man looks out the window while talking to someone during a power outage in Colombo, Sri Lanka, on March 30, 2022.Reuters/Dinuka Riyanawatte
Have you ever found yourself sweating in the dark and wondering what a crash course on Ghana’s energy situation would be like? Well, it’s pretty easy if you have a little time.
In other words, the Government of Ghana owns GNGC, VRA, ECG and GRIDCO. VRA and GNGC are wholesalers of energy products. Gridco is a transporter. ECG is a retailer. But remember, they are all owned and controlled by the government, so calling any of them “the government” at any time is justified. This is useful. Just watch.
GNGC is saddled with $1 billion in debt that the government borrowed from the Chinese. GNGC currently has a gas plant. Therefore, we sell gas to VRA to generate electricity. But VRA doesn’t pay. This means that VRA owes his GNGC nearly $400 million. This means that GNGC cannot pay the government and the government cannot pay the Chinese. But so far, the government is not complaining.
VRA sells electricity to ECG and therefore owes money to GNGC, which ECG is unable to pay. ECG therefore owes VRA his nearly $1 billion. ECG cannot pay as the government borrows $600 million from various subsidies under various names.
The government is unable to pay as the cost of electricity continues to rise and the value of hidden subsidies it has promised continues to explode.
The cost of electricity and subsidies continues to rise as the government does not pay its debts, so ECG and VRA have to rely on expensive bank loans to continue operating (currently $1.6 billion in debt) ). This leaves the VRA unable to find funds to invest or pay suppliers, leading to power shortages. So the government brings in generators from Dubai and Turkey, produces electricity at almost double the price the VRA can’t afford, and sells it to the VRA on a whim. VRA pitches his ECG with a wink. ECG is like “Guys!”
So the government decided, as usual, to ask ECG to cut a full $100 million in subsidies from its sales. The government is tired of Ghanaians complaining every day about the cost of electricity when they get it and complaining when they don’t. So the government instructed the ECG to give Ghanaians $100 million worth of free rein under the government tab (yes, we mean “subsidy”).
ECG thanks the government for the $100 million it does not have and for asking the government to provide Turkey with another double of the electricity that ECG cannot pay for. But what happens to the rest of his $600 million in power that you let us sell for free on your tab?
The government looks pointedly at the EKG and says: Look, you actually owe me (yes, I do) ,Damn!). You must have forgotten that!
The government says what I’m going to do is go and borrow another $2 billion and spread it on the books of other people who owe you and me. Of course, you’re going to use that cash to pay me some of the money you owe, and I’m going to pay you back some of the money you paid, and you… uh β¦Don’t worry about that for now.
When all is said and done, you will look so attractive on EKG that someone will come here from overseas big sites and make great money from you. Yeah.
That’s where we are now, folks. Thank you for understanding.
PS: This article was first published in 2016
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