Minister of Energy Nominee, Dr. Matthew Opoku Prempeh says Ghana’s energy-sector debt could increase more than fourfold to US$12.5 billion by 2023 if concrete steps are not taken to clear the debt.
He explained that the debt keeps growing because the power distribution company, ECG, cannot collect all the money for the energy it sells.
Dr. Opoku Prempeh said this when he appeared before the appointments Committee of Parliament.
The ministry said in its energy sector recovery report, the debt owed fuel suppliers and energy producers were estimated at US$2.7 billion in January 2019.
This was after the government introduced energy bond sales in 2017 to help clear the debt. Dr. Opoku Prempeh promised to meet all players in the sector to let them understand that if they don’t change and agree on some parameters the sector will collapse.
He said if confirmed to the post, he will seek relief through ongoing renegotiation of power contracts with private power producers and will consider a different approach to privatizing ECG.
Attempts to do so in 2019 through a U.S.-funded aid program, he said, did not work. Since the renegotiation of the power deals began in 2019, three of the 12 independent producers have agreed to take steps to cut their tariffs charged government, however, none have agreed to stop charging the government for energy it does not consume.
Those obligations, under the so-called take-or-pay clauses, cost the government about US$500 million every year.