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22 February 2017

Akufo-Addo mulls over $2.4 billion heavily indebted Energy sector

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President Nana Addo Dankwa Akufo-Addo has revealed that the previous Mahama-led administration has left behind a heavily indebted energy sector.

He said as of December 2016, the energy sector had accrued a 2.4 billion dollar debt.

Delivering his first state of the nation address, President Akufo-Addo said attempts by the previous government to resolve the power crisis has led to “a gargantuan debt.”

“We have inherited a heavily indebted energy sector with the net debt reaching 2.4 billion dollars as at December 2016,” he said.

President Akufo-Addo said 800 million dollars of this debt is owed to local banks which threatens their stability and that of the whole financial sector.

President Akufo-Addo delivering his first State of the Nation Address 

One of the most difficult periods of the Mahama-led administration was how to deal with a four-year long power crisis that brought many businesses to their knees and rendered many jobless.

In a bid to resolve the crises, then president John Mahama resorted to buying power from neighbouring Ivory Coast and the importation of power badges among others.

President Akufo-Addo said the huge indebtedness of the energy sector constitutes the single major hurdle to Ghanaians enjoying reliable and affordable electricity supply.

He acknowledged that although there have been some improvement in the power supply since November last year,  the challenges facing Ghana’s power sector are far from over.

He said the key problem is cost, adding that although “We produce power from Akosombo at three cents per kilowatt hour, the marginal price for businesses is an effective 42 cents, more than 10 times the average tariff in west Africa.

“This makes it very difficult to start or run a business here and be competitive. The cost of energy destroys businesses large and small…it is the bane of the vulganizer, tailor, dressmaker and the hairdresser, the carpenter and the wayside fitting mechanic. It destroys jobs, it compounds poverty,” he stressed.

President Akufo-Addo indicated that the current state of the energy situation in our country is unsatisfactory.

He said even though the problems are enormous his administration is ready to confront them.

In order to resolve the challenges with the sector, President Akufo-Addo is proposing an improvement in transparency of tariff setting.

He said his administration will ‘introduce a new tariff  policy that will reclassify consumer categories in order to protect lifeline and strategic industrial consumers.

“We will also reduce significantly some of the levies and taxes on the tariffs.”

President Akufo-Addo also revealed that as at the end of 2016 Ghana’s only power distribution company – Electricity Company of Ghana (ECG) – has signed 43 power purchase agreements whilst a further 23 were under discussion.

He said government is conducting a review of all the power agreements entered into by the previous government in order to “prioritise, renegotiate, defer or cancel outright if necessary in the national interest.

“Overall, we have began to develop a national electricity master plan which will al,so explore the benefits of listing VRA (Volta River Authority) and GRIDCO (Ghana Grid Company) on the stock exchange.

 

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