A weakened ECG to rescue IPPs? – Terkper asks

Former Finance Minister Seth Terkper has indicated that the Electricity Company of Ghana (ECG) has been weakened.

He was reacting to a meeting held with ECG on Friday, between the state power distributor and the Independent Power Producers (IPPs) which led to the suspension of the planned shutdown of power plants.

Following the meeting, the managing director of the ECG Samuel Dubik Mahama explained that, per the agreement reached on the framework going forward with IPPs, ECG “agreed to stay current. So if I am current now, every month, you are okay.”

He continued “We used interim in two forms. The other one is that they [IPPs] are waiting to hear how the legacy debt issue is going to be addressed and what the formula or style would be for us to talk and move forward. But in truth, nobody wants to keep spending not knowing where the money is coming from. That is why we agreed on the way forward now and the way forward is comfortable for all of them so we are in good shape.”

Commenting this in a series of tweets, Mr Seth Terkper said “A weakened ECG to rescue IPPs? Back to the wisdom of positioning ECG and other SOEs such as VRA [indeed, an integrated energy sector] to assume their responsibility with GOG and external (MCC & World Bank) financing, guarantees & technical assistance?

“GOG was to clear all power or “dumsor” arrears [ESLA]; the WB came in with the Partial Risk Guarantee [PRG] and financing; and, under the MCC compact, financing to ECG. Recall PSP plan that became the aborted PDS saga?

“Under last leg of this integrated plan, besides ESLA, GOG started the pre-paid meters plan to strengthen ECG. Improving & sustaining policies is good for Ghana.”Regarding the issues of the ECG, Executive Director of the Africa Center for Energy Policy (ACEP) Benjamin Boakye earlier said that between March and April this year, the ECG managed to collect only 11 percent of debts owed to the company.

Mr Boakye described this as disastrous.

Speaking on the Ghana Tonight show on TV3 with Alfred Ocansey on Thursday, June 29, in connection with the threats by Independent Power Producers (IPPS) to cut power supply by July 1 due to debts owe them, Mr Boakye said “Essentially, it is the result of poor planning, poor delivery of actions and roadmaps to be able to address the concerns. We always knew that this kind of situation would happen as far back as 2014.

“We started putting in place measures to reform the energy sector, particularly the distribution sector. That is how the MCC programme actually came to be because America was giving money and we decided that among all the sectors of our economy, energy was paramount and therefore we wanted to invest the $500million to reform the energy sector and a chunk of that was to go into reforming ECG to be able to deliver on its mandate and be effective at that.

“So over the years that plan has jolted and failed to deliver as planned and that is what is deepening our problems today and it has gotten worst. If you look at the data, everything suggests that it is getting worse by the day.

“I am looking at revenues that were collected between March and April which actually show that revenue requirements, we could only meet about 11 percent of the revenue requirements from the ECG’s collection and that essentially is very disastrous for the sustainability of not just the energy sector but the economy in general. Because if ECG fails to pay the government has to pay and that is part of the agreement that we had with the IPPs that are actually generating power.”