Member of parliament for Bongo, Edward Bawa, has called on government to pay off the Electricity Company of Ghana’s (ECG) debt to the West Africa Gas Pipeline Company (WAPCo) to avert power crisis.
According to him, the October 26, power outages which affected most parts of the country were as a result of power generation deficit. He revealed that per the statement from the Ghana Grid Company Limited (GRIDCo), there was a limited supply of gas to Tema occasioning the power supply gap of 550MW.
This, he noted, obviously inconvenienced a lot of citizens as social media was awash with Ghanaians venting their frustrations on the handles.
Mr Bawa however noted that keen observers of the energy sector knew that this was a disaster waiting to happen since the non-operationalization of the Cash Waterfall Mechanism (CWM).
“Government must as a matter of urgency intervene as the shareholder of ECG and make the minimum expected payment of $8.31 million so that Ghanaians would not have to sleep in darkness again. In the medium to long term, government must make arrangements to pay off the total indebtedness of ECG to WAPCo and immediately re-institute the Cash Waterfall Mechanism.”
Edward Bawa
Elaborating on the implications of the operationalization of the Cash Waterfall Mechanism (CWM) on the new trend of outages, Mr Bawa stated that the mechanism was instituted to prevent the growth of the sector-wide indebtedness as government services what has come to be known as legacy debts in the energy sector.
He indicated that in July 2017 the CWM which had been introduced by the NDC government in late 2016 was again approved for implementation by the New NPP government.
Furthermore, he expressed that this was to ensure an equitable and transparent distribution of energy sector revenues amongst all stakeholders in the sector’s value chain, as the CWM became effective for companies and entities servicing more than one loan.
“After initially proving to be relatively effective in controlling the sector’s debt, the mechanism is increasingly becoming unavailing, as it is unable to pay for 80 per cent of power sold to ECG. The CWM pays for only 20 per cent of delivered energy invoices.
“The remaining 80 per cent keeps adding to the arrears which has resulted in ECG owing the IPPs alone about $2 billion. The same can be said about the accumulation of debt as a result of fuel used by the power generators and the transmission of same.”
Edward Bawa
Impact of Cash Waterfall Mechanism
Moreover, Mr Bawa highlighted that the latest effect of the non-functioning of the Cash Waterfall Mechanism is what was experienced yesterday October 26, 2023, when about 30% more of ECG customers had no lights.
As part of the Gas Transportation Agreement between the Electricity Company of Ghana (ECG) and the West Africa Gas Pipeline Company (WAPCo) to transport gas from Aboadze to power plants in Tema, he revealed that WAPCo demanded that the government of Ghana put up a guarantee against failure by ECG to pay for gas transportation.
“This was because WAPCo was wary of the financial challenges of the power off-taker and was thus unsure they will be paid anytime ECG was invoiced. Government elected the Ghana National Petroleum Corporation (GNPC) to serve as the guarantor. It was therefore not surprising that when ECG defaulted in its payments WAPCo wrote letters to the guarantor for payment.”
Edward Bawa
Also, the Bongo legislator stated that the total cumulative outstanding invoices currently stand at US$17.13 million after GNPC paid an amount of $2.00 million. Nonetheless, he underscored that all attempts to get ECG to make the required minimum payments have been unsuccessful.
“So yesterday WAPCo carried out their threat and curtailed the flow of gas from the Western Region to Tema hence the limited supply of gas to the Tema enclave causing a supply gap of 550MW at peak time.”
Edward Bawa
Meanwhile, Mr Bawa iterated the need for government to pay off its debt, insisting that very soon, the IPPs will also be on the neck of ECG for their accumulated arrears and government must be ready to intervene to avoid Dumsor. To this end, he emphasized that the time for government to act is now.
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