High Electricity prices and related issues

19-05-2017

High Electricity prices and related issues

The Ghana government has made amendments to the Millenium Challenge Corporation’s (MCC) support for the country’s energy sector without involving all stakeholders. This criticism was issued by Mr Ben Boakye- Executive Director of the Africa Centre for Energy Policy (ACEP). At present Ghana has the highest electricity prices  in West Africa which affects  all companies in Ghana.

Mr Boakeye said in a statement that: “ We are paying so much for electricity because a lot is going to waste and the Electricity Company of Ghana (ECG) is not managing things well. We need to iron out the differences and get into business with the whole concession” . According to Boakye,  government should quickly convene a meeting with all stakeholders to make known its intentions.  He stated that the government’s plans of only issuing concession agreements to companies which Ghanaians have at least 51% ownership  is not clear. He posed questions such as: “ (1) Are you going to list it? (2) Are you going to invite Ghanaian businesses who have money to team up and bid for it ? (3) What happens to companies who have been shortlisted for the concession arrangement for the past two years (and which are not  51% Ghanaian owned) because the bidding process had already started ?” The government signed the second amendment named ‘ the Ghana Power Compact”  as part of measures to improve the power sector through the introduction of independent power producers and private distributors in electricity supply as well as the privatization of the ECG. The deal requires that the ECG is given out to private sector investors on a concession bases for a period of time.

The Minister of Energy,  Hon. Boakye Ayarko , stated that the ECG is underperforming in collecting bills owed by consumers. Of the weekly revenue target of 130 million Ghana Cedis,  only 50 million Ghana Cedis is collected. He added that ECG’s debt stock is on the rise due to faulty metering systems and avoidable employee recklessness. In reaction, the General Secretary of the Public Utilities Workers Union (PUWU) stated that instead of the 50 million Ghana Cedis stated, the weekly collection is 104 million Ghana Cedis and that the target is not 150 million Ghana Cedis but 130 million Ghana Cedis.  He further explains that the target excludes the indebtedness of state entities such as the Municipal & District Assemblies  (MMDA’s) and the Ghana Water Company (GWCL). The accumulation of debt is caused by these state agencies because there is a political directive not to disconnect the MMDA’s because government has promised to pay the bills. At the end of 2016, the MMDA’s debt stood at 1,4 billion Ghana Cedis and in the 1st 3 months of 2017, the debt increased to 227 million Ghana Cedis. This year, the government paid 18 million Ghana Cedis to the ECG to offset a minor part of the debt. At the end of March, the total debt of MMDA’s and the GWCL was 1,6 billion Ghana Cedis. According to the General Secretary this has nothing to do with the behavior of ECG employees.

With all this indebtedness and the fact that state entities do not pay, which private company will want to take over EGC ?

Sources: Graphic Business , Tuesday 9th of May until Monday  the 15th of May 2017, article “ ACEP demands clarity on ‘reviewed’ power compact deal’ by Ama Amankwah Baafi , page 32 & B&FT, Wednesday 17th of May, article “ Gov’t debt collapsing ECG, not inefficiency” by Richard Annerquaye Abbey, page 3.

 Comment: Tjalling@gnbcc.net

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