Ghana’s Energy Crises, ECG to Be Blamed – Hon. Edward Bawa

Edward Abambire Bawa, Member of Parliament (MP) for the Bongo Constituency, has laid the blame for Ghana’s enduring energy crises, popularly referred to as dumsor (intermittent power outages), squarely on the Electricity Company of Ghana (ECG). Speaking on Metro TV’s Good Morning Ghana hosted by Dr. Randy Abbey, Hon. Bawa delved into the systemic challenges and inefficiencies within ECG and the broader energy sector that have contributed to the persistent electricity supply challenges.

Key Issues Highlighted by Edward Bawa:

1. Legacy Debt as a Root Cause:

Hon. Bawa identified the legacy debt as the foremost challenge undermining Ghana’s energy sector. He recalled that the National Democratic Congress (NDC) government, during its tenure, introduced the Energy Sector Levy Act (ESLA) as a solution to the age old debts in the sector. ESLA was designed to ensure that these debts, owed primarily to power producers, would be fully retired by 2025.

He explained that the ESLA fund provided a sustainable mechanism to manage and reduce debt, fostering trust between ECG and power producers. However, the current mismanagement and inefficiencies at ECG have stalled this vision, leading to an accumulation of unpaid debts.

2. Failure to Implement the Price-Waterfall Mechanism:

A critical part of the debt repayment strategy was the price-waterfall mechanism, designed to allocate revenue collected by ECG transparently among power producers. This system was intended to enhance accountability, ensure equitable revenue sharing, and instill confidence among stakeholders.

However, ECG’s operations have deviated from this mechanism. Hon. Bawa noted with concern that instead of operating a single revenue account, ECG managed 61 different bank accounts across various financial institutions. This fragmented approach has made it nearly impossible to track revenue flows and ensure transparency, rendering the mechanism ineffective.

3. Impact on Independent Power Producers (IPPs):

ECG’s inefficiencies have had dire consequences for Independent Power Producers (IPPs), who are critical to Ghana’s electricity generation. Due to ECG’s inability to make timely payments, many IPPs have reduced their generation capacity. Some, like ASOGLI Power, have even shut down operations temporarily.

This reduction in generation capacity has further exacerbated Ghana’s power supply issues, deepening the dumsor crisis and increasing the frustration of citizens and businesses.

4. Questionable Revenue Collection Practices:

ECG’s engagement of a private company, Hubtel Ghana, through sole-sourcing for revenue collection was another area of concern raised by Hon. Bawa. Hubtel charges a transaction processing fee of 0.95%. However, ECG reportedly lacks the mechanisms to monitor and verify how much revenue Hubtel collects for onward transfers into ECG accounts.

This lack of oversight has created additional inefficiencies, making it difficult for ECG to effectively manage its financial obligations to power producers.

Broader Energy Sector Challenges:

In addition to ECG’s specific inefficiencies, Hon. Bawa highlighted broader structural and operational challenges in Ghana’s energy sector, including:

Technical Losses:

A significant portion of electricity generated is lost due to outdated infrastructure and inefficiencies in transmission and distribution.

Generation Shortfalls:

While Ghana has substantial electricity generation capacity, the inability to fully pay power producers has led to reduced generation. This has directly impacted the availability of power for distribution.

Debt Accumulation:

The continued accumulation of debt owed to power producers has not only disrupted operations but has also undermined investor confidence in the sector.

To address these challenges and stabilize Ghana’s energy sector, Hon. Bawa proposed the following measures:

Full Implementation of the Price-Waterfall Mechanism:

ECG must immediately adopt the price-waterfall mechanism to ensure a transparent allocation of revenues. This will help rebuild trust with power producers and improve the flow of funds in the sector.

ECG needs to establish robust mechanisms for monitoring revenue collected through third-party firms like Hubtel to ensure accountability and optimize revenue inflows.

Effective Utilization of ESLA Funds:

The ESLA funds must be utilized as intended to systematically retire the energy sector’s legacy debts. This will alleviate financial pressures on ECG and enable power producers to maintain or increase generation capacity.

Streamlining ECG Operations:

ECG should consolidate its bank accounts into a single operating account to improve transparency and facilitate better financial management.

Modernizing Infrastructure:

Investment in upgrading distribution infrastructure is critical to reducing technical losses and ensuring efficient electricity delivery.

Hon. Bawa warned that unless these measures are implemented, the challenges facing Ghana’s energy sector would persist. The country would continue to grapple with intermittent power outages (dumsor), and businesses and households would remain burdened by unreliable electricity supply. Moreover, the inability to resolve these issues could lead to further debt accumulation, increased costs for electricity consumers, and potential investor withdrawal from the energy sector.

Edward Bawa’s analysis underscores the urgency of reforming ECG’s operations and addressing systemic inefficiencies in Ghana’s energy sector. His call for transparency, accountability, and proper resource utilization serves as a roadmap for stabilizing the sector and restoring reliable power supply for all Ghanaians.