Benjamin Boakye, Executive Director of the African Center for Energy Policy (ACEP), has warned that Ghana’s energy-sector debt will reach GHC7 billion by the end of the year if immediate debt-reduction measures are not implemented.
Mr. Boakye decried the high debt position, calling it as unsustainable, and indicating that it has arisen as a result of inefficiencies in the sector, on the ScoopGh morning program on Tuesday, November 23, 2021.
According to him, these inefficiencies amount to about 40% in terms of transmission and distribution losses when added together.
“We should be doing roughly 8% to 10% of the loss on average, but we’re doing close to 40%.” What that means is that if you sell a million-dollar power, about 400,000 cannot be accounted for in Ghana’s Power Sector and that’s a major concern,” he said.
According to the State Ownership Report for 2019, the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG) together produced over 3.5 billion cedis, up from roughly 1.2 billion cedis in the previous year (from the previous year).
“If you look at the quantum jump even within a year, it tells you that if we keep going in that direction, the country’s whole budget would become unsustainable,” he warned.
He admitted that attempts had been made to reduce the debt, but that it continues to grow owing to a failure to address inefficiencies, necessitating the urgent need for the government to take steps to solve them and prevent the debt from worsening.
“We’ve known about these issues since 2014, and we raised around $8 billion to pay off part of the oil sector’s debt.” We’ll have to pay roughly 1.6 billion a year to repay the debt, but the worst thing is that the debt has been growing since then. As a result, we continue to accrue debt,” he explained.
When it came to solutions, he was adamant that “other complementary solutions that really need to be addressed in the power sector [which include] reducing inefficiencies and ensuring that not just the tariff, but other challenges that continue to undermine the sector’s sustainability are addressed.” We must handle this in order to assure a long-term electricity supply. We can’t only focus on tariffs and ignore the other issues.”
According to the Energy Expert, if nothing is done about the problem, the country’s debt will rise to GHC12.5 billion by 2023.
“We’ve been discussing how to create answers to this problem; program after program, speech after speech, yet we’re still talking about the same issue.” “The GHC12 billion debt that we cited was simply a projection for 2019, and if we don’t handle the electricity sector problem, we may be at GHC12.5 billion in debt by 2023,” he added.