The government has settled the prolonged inter utility legacy debt of $203million component of the power sector debt within the energy sector accrued by the end of 2016.
This was made possible following a collaboration between the government, through the Ministries of Finance and Energy, the Electricity Company of Ghana Limited (ECG), Volta River Authority (VRA), Ghana National Gas Company Limited (GNGC) and Sunon Asogli Power (Ghana) Limited.
The debt involved both state owned corporations and Independent Power Producer Sunon Asogli Power Ghana Limited.
A statement signed by the Manager of Energy Trading, Research and Regulatory Affairs, Mr Elikplim Kwabla Apetorgbor, noted the hardships the parties encountered, which affected the operational and financial performance of all parties involved within the power supply chain.
It added that the operation of its members were challenged since 2016.
“It became very difficult for the private sector organisation to obtain financial support to sustain its business operation, commitment to future investments and also affected their shareholders confidence,” the statement indicated.
Transformation
Mr Elikplim Apetorgbor believes the support from the government demonstrated its zeal to ensure that all corporations within the sector had a sound and healthy financial status to sustain their operations.
It said the settlement of the debt would contribute to the improvement of the credit rating of the various organisation within the energy sector seeking for credit facilities from both domestic and international banks.
“It will further reduce the indebtedness of government, ECG, VRA, GNGC and Sunon Asogli Power Limited making their books much better than before,” the statement added.
It therefore pledged the commitment “to continue to collaborate with all the parties within the energy sector and the Government in sustaining and meeting the electric power demand in Ghana.”
Meanwhile, the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDiB) also wants the government to prioritise clearing all outstanding debt owed its members to ensure continuous power supply in the coming days.
Energy sector strides
Ghana’s energy sector has had its share of challenges, despite the important role energy plays in economic development.
Ghana currently pays over $500 million a year for unused electricity. Most of the PPAs are legacy agreements, entered into under the previous administration in an uncoordinated and hasty attempt to end dumsor.
The tariffs agreed were not competitive and have contributed significantly to the build-up of debt in the sector and oversupply of energy.
Already, the government, in the past few weeks, has successfully secured new power purchase agreements with Cenpower and CENIT Energy Limited which are expected to save the country $3 billion and $200 million respectively over the remaining life of the agreements with the two companies.
In collaboration with the World Bank, the government has created the Energy Sector Recovery Programme (ESRP), to identify the policies and actions needed for financial recovery in the energy sector over a five-year horizon (2019-2023).
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