Government has announced that its indebtedness to the Electricity Company of Ghana (ECG) amounting to some GH¢2.6 billion has been settled, and also revealed a credit balance of GH¢500million. The move is part of efforts to guarantee viability of the power distributor and ensure it has enough funds to inject into operations, as well as keep a clean balance sheet to source credit for future expansion.
Speaking at the COVID-19 update press briefing, the Minister of Energy, John Peter Amewu said: “This administration was confronted with a huge electricity indebtedness to the Electricity Company of Ghana,” adding that as at December 2016 the total debt owed ECG by government was GH¢2.63billion.
The current government, he explained has paid GH¢2billion annually to cover its bills to the Electricity Company of Ghana. “Today, as from the end of 2019, all government bills with ECG have been paid and government has a credit balance of GH¢500million.”
The minister added that the credit balance means government settled its first quarter energy bills to the ECG in advance. “With an average bill payment of about GH¢100million per month, the credit balance of over GH¢500million is enough – and more than enough – to pay government’s bills from January to April 2020.”
Not only ECG has had its government indebtedness settled, but also some firms which supply fuel to the power producers, the minister noted. “It is also interesting to note that an unreconciled additional payment of GH¢4.14billion has also been made to various fuel suppliers of power producers, which is yet to be credited to government under the ongoing reconciliation exercise.
“And so, if this amount (GH¢4.14billion) is added to a credit of GH¢500million which government has already, then government is in a comfortable position to inform reliable consumers of electricity that the sector is gradually getting out of its woes.”
He added that as part of efforts to ensure reliable power supply and an effective ECG, government has approved the Energy Sector Reform Programme. “The Energy Sector Reform Programme that was instituted by this government has already been approved by Cabinet with the Senior Minister as Chair. Under the programme, government will continue working toward a reliable and effective electricity company in this country.”
Government’s indebtedness to the power distributor is said to the biggest on its books, hampering he growth of the ECG. This move has given the ECG a new lease of life, with many energy experts hoping it will lead to metamorphosing the company to compete meaningfully in the sub-region and on the continent.
The Energy Minister further revealed that government has begun paying for the cost of the 50 percent waiver for electricity consumers for three months due to the impact of COVID-19. It is estimated that the move will cost the Electricity Company of Ghana some GH¢732million.
Lifeline customers – who are generally regarded as underprivileged with low electricity consumption (consuming less than GH¢19.26 monthly) – will enjoy free power for April, May and June; while Non-Lifeline customers (consuming above GH¢20 monthly) will enjoy a 50 percent rebate using their March 2020 consumption as the benchmark.
The remaining 73 percent of ECG’s customer population who are on the Non-Lifeline category and will have 50 percent of their bills consumed by government will see the state also absorb GH¢235.4million monthly.