Ghana government owes GH¢420m utility arrears in energy sector – Ministry

The Ghana government has GH¢420.99 million of utility arrears in the energy sector to clear as at the end of 2012.

According to a report by the Ministry of Finance and Economic Planning (MoFEP), obtained by ghanabusinessnews.com, the government owes three key state agencies in the power supply chain – the Volta River Authority (VRA), the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo).

The government’s indebtedness to VRA, ECG and NEDCo was GH¢239.89 million, GH¢107.73 million and GH¢73.37 million respectively as at the end of 2012, indicates the report which was completed May 2013.

The government, through MoFEP and the Energy Ministry has therefore developed an arrears clearance plan to effectively deal with the issue in the energy sector.

The objective of this strategy, the report explains is to establish the total arrears, payment of the arrears and measures to mitigate its re-occurrence.

According to the report, the Finance Ministry has proposed two strategies – an  absolute cash payment and the securitization of the debt.

For the cash payments plan, the government said it made an allocation of GH¢100 million under the 2013 Budget to clear part of the arrears. “This is expected to reduce the stock from GH¢420.99 million to GH¢ 320.99 million,” it added.

The report indicates that government plans to securitize an amount of GH¢320.99 million for the 2013 fiscal year and/or pay in 2014.

The Ministries of Finance and Energy are also collaborating to monitor the clearance or accumulation of arrears.

Ghana’s power sub-sector requires an investment of $4.2 billion, according to an analysis report conducted by the Energy Ministry in October 2011.

By Ekow Quandzie