The National Democratic Congress (NDC) Member of Parliament for Yapei-Kusawgu, Hon. John Abdulai Jinapor, has criticized government over the alarming financial state of the Electricity Company of Ghana (ECG).
Mr. Jinapor pointed out the Public Utilities and Regulatory Commission’s (PURC) report on the power sector, in which he highlighted the deepening crisis within the energy sector in Ghana and the need for possible solutions, including privatization. Mr. Jinapor began by commending the PURC for sounding the alarm and raising awareness of the deteriorating state of Ghana’s power distribution sector. He expressed his concern about the ongoing collapse of the energy sector and criticized the lack of immediate government intervention.
“You don’t need a soothsayer to tell you that the energy sector is collapsing. You don’t need somebody to tell you the energy sector is crumbling. In 2022 alone, ECG posted a loss of over 10 billion cedis. That has to be paid by the shareholder. In this case, that is government.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
Mr. Jinapor’s statement reflected the dire state of ECG’s finances. He revealed that the government owes ECG.
“Currently, as we speak, the government owes over 1.8 billion cedis from power that has been consumed and not paid for. This is captured in the cash waterfall mechanism as published by the Public Utilities and Regulatory Commission.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
The Impact of Poor Policy Decisions
Mr. Jinapor also highlighted how poor policy decisions have contributed to the energy sector’s challenges, particularly in the supply of gas, which is essential for powering thermal plants. He criticized the government’s approach to managing Ghana’s gas resources, which had led to a need for additional spending on light crude oil for power generation.
“Today, due to very bad policy decisions, the gas infrastructure that we claimed when NPP assumed office, that the Mahama government left so much gas that they were paying capacity charges on unused gas, the gas is no more adequate to power our thermal plant, and so the government is procuring $40 million of light crude oil every month, using ECG, most of which has been procured on credit and not paid for.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
This heavy reliance on expensive light crude oil, according to Jinapor, further drains the already ailing finances of ECG. He also emphasized the difficulty ECG faces in revenue collection, which is a fundamental issue that contributes to the current crisis.
“The letter, as you read, tells you that ECG collects only 42% of the required amount to pay the sector. How can you have an energy sector where you can’t even collect 50% of the required revenue?”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
A Call for Concession Agreements
Mr. Jinapor expressed support for the approach adopted in countries like Uganda, Kenya, and Tanzania, where privatization has led to improvements in power distribution. Drawing from his experience visiting these countries as a Deputy Energy Minister, Jinapor argued for a similar concessionary model for ECG.
“I led a team when I was deputy minister to Uganda, to study the Ugandan concession by UMEME. We went to Kenya. We went to Tanzania. We went to India and studied all their ways of collection. They are doing about 98% and that is why we brought on the PDS agreement to reduce the losses and collect 92%.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
Despite advocating for a concession agreement Instead, he proposed bringing in the private sector to handle billing and collections while leaving the core assets under state control.
“You don’t need to sell ECG’s assets and let me put on record that President Mahama has assured that he would not sell any of the assets, be it VRA plants, ECG plants, or GRIDCo’s plants. Rather, ECG’s problem is billing and collection and that can be done through a concession.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
Mr. Jinapor believes that engaging the private sector through a concession model, with clear Key Performance Indicators (KPIs), will help reduce losses significantly in a short period.
Mr. Jinapor painted a bleak picture of the challenges that any future government will face in reviving the energy sector.
“Whoever assumes office as the next government will be assuming a debt-ridden, infrastructure dilapidated, aging equipment in the energy sector. It will take a lot of effort and a lot of work to bring back the energy sector on its legs.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
Mr. Jinapor further emphasized the collapse of confidence in the petroleum sector, pointing to the exit of major players like Aker, and ExxonMobil, and the ongoing disputes between ENI and the Ghanaian government. He emphasized; “Aker has left Ghana. ExxonMobil has left Ghana. ENI is in a tussle with the Republic of Ghana, and so nobody has confidence even in the petroleum sector.”
Moreover, Mr. Jinapor was adamant that the issue of ECG’s poor financial performance is not solely a matter of government injecting capital.
“You can’t inject money into a leaking basket. The problem is the unnecessary political interference and the corruption that has engulfed the sector. ECG must make profits. When they make the profit, they will convert that profit into equity.”
Hon. John Abdulai Jinapor Member of Parliament for Yapei-Kusawgu
For Mr. Jinapor, the path forward for ECG lies in strategic concessions focused on billing and revenue collection, rather than complete privatization or constant capitalization from the government. By addressing these core issues, he believes that Ghana’s energy sector can be saved from its current crisis.
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