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Kweku Kwarteng, Member of Parliament (MP) for Obuasi West, has stated that the challenges in Ghana’s power sector will continue to exacerbate in the coming years if the high level corruption and inefficiency in the sector are not dealt with pragmatically.

Mr Kwarteng disclosed this while speaking to Accra-based Joy Fm on the recent subsidies announced by government for power consumers.

“Where is government going to get the money from? If it says this is sustainable, the increment that has happened in the past that government is now seeking to remove, the margin, where did the money go to? Why has government overcharged us all this time and as it sees elections approaching, and the opposition are complaining of so much inefficiency in the power sector, it now turns around to announce subsidies?” he quizzed.

Power gadgets

According to him, there was high level corruption in the procurement of power gadgets, particularly the Ameri and the Karpower deals and nothing has been done to correct the anomalies.

“There is so much corruption in there that if you will deal with those inefficiency issues, you could make savings to save consumers the increases.”

Analysts have indicated that the introduction of subsidies in these critical moments when government was heavily indebted would only compound the country’s debt situation.

ECG part-payment

A few days ago, there were reports that the Finance Ministry had released a cheque for GH¢200 million to ECG to pay part of the debt owed it by government’s Ministries, Departments and Agencies (MDAs).

“We don’t know whether the money has been released yet to ECG to clear the last part of the debt, but that will be a drop in the ocean considering the fact that the GH¢200 million is just about $50 million. Government owes ECG $600 million and the debt keeps increasing consistently.”

IMF calling shots

Mr Kwarteng stated that the International Monetary Fund (IMF) was basically dictating how government should spend its money.

Subsidies were supposed to be removed as part of the conditionalities of the IMF extended credit facility (ECF) arrangement, so why have we decided to reintroduce a subsidy of a $100 million when already we have a debt that is mounting to $600 million and growing, he said.

In its report last year, the IMF, which estimated the impact of poverty on Ghana’s fuel and energy subsidy reforms and the mitigating response, said 78 percent of the reliefs that electricity subsidies give do not benefit the poor.

Dog chasing tail saga

While government owes ECG, ECG owes VRA, which also owes Ghana Gas and independent power producers nearly $400 million.

Also, Ghana Gas owes Sinopec about a billion dollars.

The subsidy is expected to affect about 400,000 out of the 3.1 million customers, including non-residential, with about 2.3 million being residential.

The subsidies which would last for six months would cost the government some GH¢300 million.