Business News of Wednesday, 28 November 2018
The Electricity Company of Ghana [ECG], will continue to incur huge loses annually which will affect power supply if the Public Utilities Regulatory Commission (PURC), does not implement an automatic tariff adjustment formula for ECG.
According to the General Manager in charge of Business Development at the Electricity Company of Ghana (ECG), Theo Asante Darko, the country may not be able to adequately solve its power challenges if calls for the automatic price adjustment formula is ignored.
The PURC is mandated by law to protect the interest of both consumers and provides of utility services by setting standard or reasonable tariffs and charges for utility service providers.
Ghana in the past few weeks has been experiencing erratic power cuts in some parts of the country. Some analysts have blamed high indebtedness among companies in the power generation, transmission and distribution chain.
In the case of ECG in particular, they have been blamed for much of the debt to the power producers due to the huge losses they incur as a result of poor collection and power theft.
Bad contracts, high debts cause of Ghana’s energy woes – ACEP
The Executive Director of the Africa Center for Energy Policy, ACEP, Ben Boakye, has explained that the country’s current energy challenges resulting in a frequent power outage is due to the sector’s high indebtedness.
Speaking on Citi TV’s Point of View, Ben Boakye indicated that, the Electricity Company of Ghana (ECG) was the most indebted agency within the sector with a debt of almost Ghc1 billion as of July 2018.
“We have to address the fundamental cause. The power sector is on steroids because we haven’t stopped creating the debts. If you check ECG’s operation for 2018, documents I’ve sighted showed that first quarter of 2018, they made a loss of almost Ghc1 billion. If they are making losses, they are not able to pay. and if they are unable to pay then the generator will have to call on the one who owns the contract that is government and government will have to get money come and pay. So if we don’t solve that problem then we’ll have to use our taxes at a point to pay the generators.
Records show that the Electricity Company of Ghana in 2017 made a net loss of GH785 million.
But speaking on the Citi Breakfast Show on Tuesday, Asante Darko said most of the companies in the distribution chain purchase fuel and other equipment they need in generating power in dollars, but ECG which is supposed to sell the product prices it in cedis.
He said PURC would have to step in to correct the anomaly because the current tariff regime is not helping matters.
“The issue is that the [power] generation companies buy their fuel and any other accessories they use to generate the electricity in dollars. But the electricity tariffs are in cedis. So there is an automatic adjustment formula that the PURC would have to do to adjust it. As long as the ECG is regulated, if there is any change at the generation level and it does not translate into the tariff, there would be that problem.”
“Let’s depoliticize this issue, look at where the problem is and let’s not create the impression as if somebody is not telling the truth or somebody is inefficient. I know, there are a number of issues in the system that can be fixed but it’s all money. And if the tariff regime does not adequately cater for the entire system, we will continue to run in cycles,” Asante Darko added.
Dumsor to return or not
Asante Darko’s comment comes on the back of recent agitations over the seeming return of erratic power cuts.
Reports indicate that unpaid government debt to power producers is the reason for the outages; a claim some government communicators have disputed.
But the Minister of Energy, Peter Amewu conceded that financial and technical challenges are to blame for the current outages.
“Our major challenge has been the incomplete reverse flow project to flow gas from the West to the East. We had to fast-track it through a by-pass which has been completed, but not connected to the West African Gas Pipeline yet. This is because WAGPA has not come out with the tariff for the reverse flow, and WAPCO will not sign the Gas Transportation Agreement (GTA) without a tariff. WAPCO wants to charge US $3.2 MMBtu, whilst we want to pay US$1 MMBtu.”
Mr. Amewu, however stressed that the challenges of Ghana’s power supply and the power cuts citizens suffered are now under control.
“The Ministry of Energy wants to assure the public that the situation now is very much under control.”
Dumsor will never be back – ECG assures
Mr. Asante Darko on the Citi Breakfast Show assured that dumsor will not return.
“Dumsor is not back and will certainly not be back, at least, as long as I work with ECG,” he told host of the Citi Breakfast Show, Bernard Koku Avle.