Policy think tank Africa Centre for Energy Policy (ACEP), has called on government to come up with a financial recovery plan for the Volta River Authority (VRA), Electricity Company of Ghana (ECG), and Ghana Grid Company (GRIDCo).
VRA is saddled with debts owed banks, the Ghana Gas Company, Nigeria Gas, the West Africa Gas Pipeline Company, among creditors. The ECG, on the other hand, is indebted to the VRA and GRIDCo. The Ghana Gas Company is also reeling under pressure.
Government is currently engaging banks to restructure some of the debts. Speaking to Class Business, the Executive Director for ACEP, Dr Mohammed Amin Adam, said that particular measure was temporary, adding that government must find a lasting solution to the financial problems of the power sector.
“Government is considering two options: first of all to restructure the debts and that is why they are getting the consortium from banks to agree to restructure VRA’s indebtedness to them over a certain period of time. Restructuring doesn’t take away the debt, restructuring only means postponing the repayment. … Restructuring also means negotiating the interest rate down, and, so, the two things we are doing are increasing the maturity period, that is, postponing the debt, and also negotiating the interest rate down, but that doesn’t take the debt away. This is why I am asking for a financial recovery programme,” he stated.
“Government is supposed to capitalise the companies because government is 100 per cent owner of the companies. We need to know for the next five years how much government is ready to put into these companies. Over the next five years, how is government going to pay off its debts to the utilities…? Over the next five years, will government bring out a policy that ensures that every consumer within the government sector that pays for the power that they consume and that we will be moving away from the centralised approach from government’s payment of bills to a decentralised approach?
“These are the things we need in a financial recovery plan that will strengthen the utilities to become independent financially rather than relying on government. … So, I am happy that they are doing the debt restructuring, but the debt restructuring doesn’t take away the debt, it only gives you some leverage in terms of timing for the repayment and so we need a real solution and not debt restructuring.”