Ghana’s energy sector state-owned institutions recorded cumulative losses of about Gh¢ 9.1 billion between 2018 and 2020.
These losses were recorded by eight energy sector agencies namely Tema Oil Refinery (TOR), Northern Electricity Distribution Company (NEDCo), Ghana Grid Company (GRIDCo), Bulk Oil Storage and Transporation Company (BOST), Volta River Authority (VRA), Volta Aluminium Company (VALCO), Ghana National Petroleum Corporation (GNPC) and Electricity Company of Ghana (ECG).
The agencies recorded losses of GH¢3.7 billion in 2018, GH¢2.9 billion in 2019 and GH¢2.5 billion in 2020.
Except Bui Power Authority (BPA) and Ghana National Gas Company (GNGC) which recorded profits in 2018, 2019 and 2020, Volta River Authority recorded a profit of Gh¢156.5 million in 2020, while GNPC booked a profit of Gh¢539.2 and Gh¢204.35 in 2018 and 2019.
Bui Power Authority recorded profits of Gh¢238.1million, Gh¢209.7 million and Gh¢314.1 in 2018,2019 and 2020 while Ghana National Gas Company booked profits of Gh¢183.04 million, Gh¢81.58 million and Gh¢217.46 in the same period.
The figures were contained in the State Ownership Report (SOR)
titled ‘The state of the energy and extractive sectors of Ghana’ prepared by State Interest and Governance Authority (SIGA).
Commenting on the State Ownership Report at a press conference in Accra, Executive Director of the African Centre for Energy Policy (ACEP), Benjamin Boakye, said the report has revealed how bad it is for government to continue to conduct business, particularly in areas where it is supposed to regulate.
He said the power sector remains unsustainable and a major threat to economic growth; noting that urgent steps are required to stop the debt accumulation and ensure the settlement of existing debt more sustainably.
In 2020 and 2021 alone, Mr Boakye said the government’s settlement for the energy sector under-recoveries was more than GH¢14 billion – GH¢6.8 billion in 2020 and GH¢7.2 billion in 2021, a situation that he stressed must not be allowed to continue.
The inability to control under-recoveries, he explained, also undermines the objective of the Energy Sector Levy Act (ESLA)–a special purpose vehicle that issues long-term bonds to resolve the sector’s indebtedness.
“Currently, levies paid under ESLA barely settle coupon payments, transaction and administrative costs. Outstanding bonds to be settled at maturity amounts to GH¢8.7 billion,” he added.
According to him, there is an urgent need to restructure the energy sector institutions.
“Agencies that can be efficiently managed by the private sector and regulated by the state do not need to exist as government agencies are susceptible to political interference and the generation of unwarranted losses, he said.
“Addressing the challenges could free resources for development and realign government priorities toward growth. It remains injurious for billions of debts to be created in the energy sector, whose value exceeds direct investment in infrastructure. For example, the US$1.2 billion spent to pay for under-recoveries in 2021 in the power sector alone could have been useful for building roads and other critical infrastructure,” he recommended.
He further said management and functions of the state’s energy sector institutions require urgent review to reduce the government’s exposure to losses.
“The State Interests and Governance Authority (SIGA) must accelerate its review of the SOE’s performance and determine which of them require divestiture, particularly those competing with the private sector in areas where regulation can achieve the same result.
“SIGA must immediately reform appointment, recruitment and other corporate governance practices to comply with acceptable corporate standards,” it further stated.