Government to deal with utility companies – Energy Minister
Government will not hesitate to crack the whip on non-performing utility companies to ensure efficient technical and financial performance in the power sector.
Mr John Jinapor, Deputy Minister for Energy and Petroleum, who gave the warning on Tuesday described as unacceptable the poor policies and practices of the companies that has negatively impacted the economy.
He was speaking at the launch of World Bank Ghana’s flagship energy sector report in Accra.
Mr Jinapor said Government would no longer tolerate laxity and a lackadaisical attitude adopted by some of the country’s utility companies towards their operations.
He said he found it difficult to understand why some people had to wait for months after they had paid for electricity to get connected.
Mr Jinapor said some of the companies also lacked efficient means of collecting revenues.
“We cannot continue to tolerate the level of losses we are making”, he said.
Mr Jinapor put the level of operational losses in the power sector at 27 per cent, adding that though progress had been made at reducing the losses from the previous 40 per cent, more needed to be done to further reduce it.
The 63-page report highlighted the daunting challenges facing the country’s power and petroleum sub-sectors which could threaten Ghana’s bid to become a fully-fledged middle income country.
It is entitled “Energising Economic Growth in Ghana-Making the Power and Petroleum Sectors Rise to the Challenge”.
The report made some recommendations to the Government for improved sector performance and the event was to solicit feedback from participants and stakeholders.
On the power sector, the report stressed that the sector was facing two challenges arising from forces external to the sector.
These factors include the lack of adequate and secure quantities of reasonably priced fuel for power generation and the lack of adequate public funds to finance the sector’s investment requirements.
The report said: “These challenges are exacerbated by the poor technical and financial performance of the Electricity Company of Ghana (ECG) and Volta River Authority (VRA) and policies and practices that seriously damage the financial health of ECG, VRA and the Ghana Grid Company Limited”.
It said Government policies and decisions had delayed investments in gas supply and power generation which are the root of the current power shortages.
“Avoidable delays in the production of Jubilee gas have left Ghana’s gas-based power plants needlessly lying idle or burning very expensive oil”, the report said.
“The three-year delay in commercialising Jubilee gas has cost Ghana billion dollars in extra crude oil used for power generation.”
The report said several state-owned energy enterprises and oversight entities were underperforming.
It said there existed the absence of accountability and proper oversight as well as non-existence of sanctions for non-performance in delivery of energy supply.
On pricing, the report said the current tariff subsidy policies for energy were not financially sustainable.
It said energy providers did not collect adequate revenues from users and struggled with inadequate state subsidies.
Consequently, the subsidies weighed heavily on the national budget whiles the providers found it difficult to maintain and expand their physical infrastructure.
Reacting to this recommendation, Mr Jinapor said there was the need for Government to take critical innovative thinking and action to deal with the issue of realistic tariffs.
“We need to think long-term and medium-term in order to reduce cost as well as to deal objectively with the issue of tariffs”, he said.
Mr Jinapor expressed the hope that the Public Utility Regulatory Commission had the capacity to determine the right tariff for Ghanaians.
On the issue of Government’s policies and decisions that had contributed to the delay in investment in the gas supply and power generation, he said the administration would not contest or assume adversarial stance to the recommendation but would take steps to improve the situation.
Mr Kwame Pianim, an Economist, expressed optimism that the feedback from participants and stakeholders would provide the basis for the establishment of a non-partisan Presidential Commission to recommend practical ways of dealing with challenges in the energy and petroleum sector.
Mr Yusupha Crookes, World Bank’s Country Director for Ghana, expressed concern for self-employed dress makers and barbers who were struggling to keep their business operational due to the erratic power supply.
He described as worrying the situation where hospital theatres experienced power outages during surgical operations.
Mr Crookes expressed the hope that the deliberations would raise public awareness on the need for candid, bold and determined suggestions to solve the challenges.
“Proactive leadership of the energy sector, with a focus on efficiency and timely delivery, is crucial to Ghana’s ambitions for economic growth,” he added.