22.5 C
October 3, 2023

Excess capacity charges not real cause of energy sector indebtedness – Economist

Dr. Theo Acheampong
Dr. Theo Acheampong

A Political and Economic Risk Analyst, says the real causes of Ghana’s increasing indebtedness in the energy sector are distribution losses and poor tariff management, not excess capacity charges.

Speaking on a radio programme monitored by the Ghana News Agency, Dr Theo Acheampong said, “The current cause of our mess and why the IPPs are threatening to shut their plants is that the tariff has not been cost reflective while there are enormous distribution losses.”

To improve the situation, Dr. Acheampong said “the tariffs must continue to go up until such a time that the cedi is stable and fuel prices are stable”.

He advised the government to revisit the Energy Sector Master Plan as proposed by the International Monetary Fund.

Mr. Edward Bawa, Ranking Member, Energy and Mines Committee of Parliament, also called for an independent bipartisan audit to ascertain the extent to which charges on excess capacity had contributed to the overall energy sector debts.

He said claims of excess capacity charges driving the energy sector debts “lacked transparency”, saying the idea behind the excess capacity was to export power to other countries within the West African subregion.

Mr Bawa urged the government to explore alternatives if it insisted that excess capacity was increasing energy sector debts.

He asserted that the reduction in tariffs in 2017 and the reluctance to increase tariffs for some years caused the indebtedness.

Mr. Atta Akyea, Chairman, Energy and Mines Committee of Parliament, stated that the energy sector debts had been a major challenge to the government.

The MP said available data indicated that the country had spent an excess amount of $900 million on excess capacity charges since 2017.

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