Senior Minister Yaw Osafo-Maafo has disclosed that the Akufo-Addo government has cleared some GH₵2.6billion debt owed the Volta River Authority. The debt, according to the Senior Minister, was inherited from the erstwhile Mahama administration in 2016.
Speaking in Accra yesterday at the launch of the 60th anniversary celebration of the VRA, Mr Osafo-Maafo indicated that Government now has a credit balance of GH₵500 million in respect of the bills of Ministries, Departments and Agencies(MDAs).
He indicated that on assumption of power, the Akufo-Addo government put together the Energy Sector Recovery Programme (ESRP) to bring the energy sector into balance by the end of 2023.
He said several successes have been chalked, including the establishment of the Cash Waterfall Mechanism (CWM), which ensures weekly sharing of tariff revenue among players in the electricity value chain. This improves liquidity in the sector.
“Cash Waterfall Mechanism, which has been hailed by the sector players, is to be extended to cover the gas sector revenues (MoEn/PURC/GNPC/GNGC and VRA) with the establishment of the Natural Gas Clearing House (NGCH),” he said.
He added that Government has instituted a least-cost fuel procurement strategy to ensure there is value for money in procuring fuel for the sector while plants convert from using liquid fuel to gas.
Mr Osafo-Maafo further disclosed that the government is paying in excess of US$500million annually for power generation capacity it does not need.
This is because due to the dumsor regime visited on Ghanaians, the erstwhile Mahama government, in a panic reaction, went into signing all sorts of Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs). That resulted in installed capacity of 5,083MW when Ghana’s peak demand for electricity is about 2,700MW.
The Senior Minister, however, noted that Government is addressing the excess take-or-pay generation capacity payments, saying negotiations are still ongoing.
“Recently, Cenpower agreed to Gas Supply Agreement that will secure cost savings of up to US$3.0 billion during the lifetime of the project.
“Relocation of Karpowership to Takoradi to achieve full conversion of engines for the utilization of Natural Gas instead of HFO. GNPC is also in talks with Sankofa to reduce their gas prices by as much as close to 15per cent (From US$9.59mmbtu to US$8.23mmbtu). This will significantly reduce sector,” he said.
He added that the government is also improving performance of distribution companies with adoption of a funding plan to cover the energy sector financial gap.
The Senior Minister commended management of VRA for sustaining the company for the past 60 years.
He noted that though public sector institutions are set up to provide services that are largely in the interest of the public, the history of the management of various public institutions leaves a lot to be desired.
“The Volta River Authority, over the past few decades, has demonstrated the strength of its resilience in operation and engineering practice, while complying with best industry practices. This has created value for our Ghanaian economy, especially for industry and our local communities,” he said.
He further noted that “most of the state institutions that were set up on the advent of our independence are either finding it difficult to survive or no longer exist,” adding that “it will be worthwhile for us to find out why the Volta River Authority has survived and also remains relevant and dominant today.”