Government, under the Energy Sector Recovery Program (ESRP), has settled all of its indebtedness to the Electricity Company of Ghana (ECG) as at end of December 2019, the Energy Minister, Mr. John Peter Amewu has revealed.
The ESRP was initiated to provide a roadmap of immediate, near-term, and medium-term actions crucial to address the financial sustainability of the energy sector by the end of 2023.
Speaking at the Ministry of Information’s press briefing on the updates to the COVID-19 situation in the country, the Energy Minister said, “On average, the government has paid GHc 2 billion annually to cover it bills with ECG.”
At the end of 2016, government’s indebtedness to the power distribution company stood at GHc 2.64 billion.
Effectively, government has been able to pay its bills amounting to about GHc 8.64 billion to ECG from the period of 2017 to 2019, inclusive of the arrears as at the end of 2016.
“Government has ensured that it was current on all its bills incurred since 2017 to date,” Mr. Amewu stated, adding that, at the end of 2019, all government bills owed to ECG had been paid, and it had a credit balance of GHc 500 million with ECG by the end of last year.
“With an average bill payment of about GH 100 million per month; then the credit balance of GHc 500 million is enough to pay government bills from January to April, 2020,” the Minister said.
Under the ESRP, government has committed to fund the Annual Sector Shortfall, with the Sector Stabilization Payments, from 2020 onwards until the sector is in balance to prevent further accumulation of arrears.
Mr. Amewu also noted that government has some unreconciled additional payments of GHc 4.14 billion that have also being made to various fuel suppliers and power producers, which is yet to be credited to it under the ongoing reconciliation exercise.
“So, with these amounts; the GHc 500 million and the reconciliation, which is yet to be completed; means government is in a position to inform viable consumers of electricity that the sector is gradually getting out of its woes,” the Minister said.
As of January 2019, US$ 2,748 million of net Sector Arrears were outstanding within the energy and gas sectors. In view of this, experts indicated that, if no action is taken, a forecasted additional US$ 1,268 million will be added to this deficit in 2019 and net arrears will grow to more than US$ 12,524 million by the end of 2023.
The Minister further revealed that government has made some payments as a result of the COVID-19 electricity subsidies introduced as part of governments coronavirus alleviation programme.
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