We inherited a “heavily indebted energy sector” – Akufo-Addo

Ghana’s energy sector is currently in a “heavily indebted” state, President Akufo-Addo has said.

Addressing Parliament in his first state of the nation address, the President noted that, the sector has enormous problems that must be addressed urgently.

“We have inherited a heavily indebted energy sector with a net debt reaching $2.4bn as of December 2016. I have to point out the alarming facts that $800 million of this debt is owed to local banks which threaten their stability and that of the whole financial sector. Indeed, the huge indebtedness of the energy sector constitutes the single major hurdle to Ghanaians enjoying reliable and affordable electricity supply,” Akufo-Addo said.

In his address, he noted that the country’s power supply had improved significantly since November 2016, however the sector’s problems “are far from over.”

Akufo-Addo bemoaned the high cost of electricity in the country, which he said greatly affects businesses.

“The current state of the energy situation in our country is unsatisfactory. The problems are enormous; but we must and we will confront them,” he said.

Stating some interventions he will introduce to address the challenges, the President said he will prioritize transparency in the sector by introducing a new tariff policy to reclassify consumer categories.

“We will also reduce significantly some of the levies and taxes on the tariff. At the end of 2016, ECG had signed 43 power purchase agreements, while a further 23 were under discussion. The Government is conducting a review of all the power agreements entered into by the previous government in order to prioritize, renegotiate, defer or cancel outright if necessary in the national interest,” Akufo-Addo said.

He noted that, the government was drawing a national electricity master plan to list the Volta River Authority (VRA) and the Ghana Grid Company (GRIDCo) on the stock exchange.

‘Enforcement of procurement law’

The president said his government will insist on open and competitive bidding for power capacity procurement agreements.

“…This will not only reduce the cost of power projects and ensure value for money; but also address the problem of unplanned procurement.”

He added that, government will review the Renewable Energy Act to provide further incentives to attract the private sector to invest in the sector.