Through a press release, ACEP’s deputy executive director, Benjamin Boakye, congratulated Akufo-Addo on delivering the speech.
Boakye noted that the organisation recognises the bold and progressive initiatives announced in Ghana’s SONA to tackle the power sector challenges, which pose significant threat to the stability of the sector and the economy as a whole.
Last week, in his speech, President Akufo-Addo stated that his predecessor John Mahama left behind a heavily indebted energy sector.
He said: “The attempts by the previous government to resolve the dumsor crisis have led to a gargantuan debt overhang in the sector.”
“We have inherited a heavily indebted energy sector, with the net debt reaching $2.4 billion as of December 2016. I have to point out the alarming fact that $800 million of this debt is owed to local banks, which threatens their stability.”
Stabilising the energy sector
After listing all of these problems facing the country’s energy, Akufo-Addo mentioned that his administration is planning to introduce some changes to settle the debts and stabilise the sector.
President Akufo-Addo said his government is considering listing the state-owned power transmitter Ghana Grid Company Limited (GRIDCo) on the Ghana Stock Exchange (GSE).
Commenting on this resolution, ACEP responded that: “This is not a position ACEP supports. GRIDCo is a strategic nexus of the power sector with control over the entire transmission system, which makes it a critical national security infrastructure.
“Government should continue to control and own GRIDCo 100%.”
ACEP added that: “On VRA, our proposal is that government should consolidate all hydro generation under VRA and separate all the thermal plants into a subsidiary of VRA Holding Company. Government can then list the thermal subsidiary on the Ghana Stock Exchange.”
Evaluation of existing power agreements – ACEP
ACEP said it is pleased that the government has already initiated a review of existing power agreements.
The organisation said this is a particularly bold decision that cannot wait any longer.
“We recognise that the combined effects of the energy sector debt and excess capacity resulting from the numerous power agreements signed could be hazardous in the near future.
According to ACEP, the World Bank estimates that Ghana could be faced with some $2.5 billion liability annually from capacity charges on excess capacity alone, if all the power generation contracts come into force.
“The probable cost of excess capacity charges could have been below the World Bank’s current estimate had the government heeded ACEP’s warning in 2015 when we estimated such cost at $360 million,” the release said.
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