Audit checks on the Bui Power Authority (BPA) have revealed a gargantuan debt outstanding to the company by the Electricity Company of Ghana to the tune of US$386,878,949.46 as at year-end 2019.
To this effect, the Auditor-General’s report notes that this is due to delays in the settlement of debts by the Electricity Company Ghana (ECG) to BPA. The audit report shows that monthly invoices to ECG are not settled within the required sixty (60) days, thus resulting in the accumulation of such huge outstanding debt owed the Authority.
“Per Section 8 of the Power Purchase Agreement between the Ministry of Energy and the Electricity Company of Ghana (ECG) for Electrical Supply from Bui Hydroelectric Plant, payment of energy produced by the Seller and sold to the buyer as provided for in the monthly billed invoices shall be effected within sixty (60) days of the dispatched of such invoices in US Dollars or its equivalent in Ghana Cedis.”
Auditor General’s report
The report states that the repercussions of such continued delays or breaches of agreed payment terms could negatively impact the cash flows of the Authority.
Meanwhile, given the Authority’s financial report from 2015 to 2019, it shows an accumulated revenue of US$448,249 generated from the sales of electricity and cost of sale of electricity amounting to US$103,144. Profit before tax within the same period also amounted to US$178,052.
That notwithstanding, the Auditor General recommended that management should ensure timely collection of debts in order to improve the liquidity position of the Authority and to enable it carry out its operations effectively.
Other issues raised by the Auditor General
In response to these assertions, the management of ECG indicated that “it is actively involved and engaged with the Ministries of Energy and Finance in developing a comprehensive solution of the Energy Sector Debts. The debt including the amount owed by ECG has been acknowledged by the Government of Ghana and measures including the ESLA are being developed to address this.”
Also, the report shows that GRIDCo is indebted to Bui Power Authority to the tune of US$41,010,518.71 (equivalent to GHS159,500,536.38) from 2013 to the time of the audit in 2019.
Nonetheless, the Bui Power Authority is also alleged to be indebted to GRIDCo in the sum of GHS5,658,577.58. Meanwhile, the report shows that the Authority has since 2013 avoided the disclosure of this indebtedness in its accounts.
According to the report, the matter is pending a ruling by the Public Utilities and Regulatory Commission (PURC). That said, the Auditor General’s report recommends that the management of Bui Power Authority should make stringent efforts to ensure early ruling on this matter by the PURC.
Another issue raised in the report is in respect of the Authority’s failure to recognize a provision for the likely decommissioning of the dam in the future. In this regard, the audit report recommends that the Authority should get a written representation from government on its commitment to fund future decommissioning of the dam should the need arise.
Although the Authority’s financials reflect a positive outturn, the Auditor General’s report highlights that, declaring excessive profits without considering future decommissioning costs of the dam may result in the diversion of funds for such a purpose being used to finance other expenditures.
READ ALSO: Deputy Finance Minister justifies rise in Inflation
