Government’s indebtedness to the Electricity Company of Ghana (ECG) has shot up to about $512 million, approximately GH¢1.945 billion, Business Guide has learnt. Ministries, Departments and Agencies (MDAs) from last year to date have failed to pay accumulated bills.
Government has repeatedly assured ECG that it would offset its debts, but there has not been any concrete plan or payment to that effect.
ECG also owes VRA about $189 million (GH¢700 million).
Due to the gravity of the situation, VRA has accepted a plea from ECG to freeze the latter’s debt until the Public Utilities Regulatory Commission (PURC) increases utility bills.
ECG has started making monthly payments for power consignments it receives from VRA in order not to compound the debt.
Hiding behind PURC
Government is forcing PURC to increase tariffs to pay its huge debts to the ECG.
The utility companies have accepted the proposed increases, citing inappropriate income from bills to offset their overhead costs, let alone make profits.
However, the proposed increases have been rejected by some Civil Society Organizations (CSOs).
TUC stated that owing to the plight of workers, it will not accept a 400 percent increment in electricity and water tariffs proposed by utility providers recently.
Analysts have indicated that Ghanaians should not be facing these challenges because crude oil is now selling at less than $50 per barrel on the world market.
N-Gas Pardons VRA
N-Gas, which supplies gas to VRA through the WAGPCo’s pipelines, has offered the VRA up to February 2016 to settle an outstanding debt of $171.5 million in three tranches.
Recently, VRA paid $9.5 million out of the $182 million debt for gas supplied from August 2014 to this October this year. As at July this year, VRA owed banks to the tune of over $1.3 billion and that has made it difficult for the power producer to obtain loans from commercial banks operating in the country.
VRA is collapsing financially because of non-payment of power supplied to some of its major customers, as well as low tariffs.
VRA spends 30 pesewas to buy fuel to generate one kilowatt hour of electricity, but consumers pay only 14.6 pesewas per kilowatt. VRA is owed by ECG, Independent Power Producers (IPPs) and the Volta Aluminium Company (VALCO).
ECG Privatisation
Government is collaborating with Millennium Development Agency (MiDA) to privatise ECG in an attempt to access the second compact of the Millennium Challenge Account (MCA) worth about $500.
Investment analysts believe if government obtains that money, it should pay its debts to ECG to sustain the company.
According to reports, an American company is likely to be given the assets of ECG over the next 20 to 30 years in order to access the US Millennium Challenge Account of $500 million.
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