General News of Tue, 13 Oct 201532

We can’t solve dumsor through budget – Finance Ministry

A Technical Advisor at the Finance Ministry, Dr Kofi Asamoa Baah has said that the recurrent power crisis in the country “can never” be resolved through budgetary allocation in view of the many other demands on the budget.

Dr Asamoa Baah made the remark to support the need for the injection of private capital into the power sector at a press conference organized last week by the Millennium Development Authority (MiDA), which is spearheading the farming out of ECG to a private investor for a possible 20-year period.

“If you look at the constraints of the budget, after we have paid salaries and all these statutory payments – District Assemblies Common Fund, GETFUND, National Health Insurance etc, we are left with only 7% for investment, and that is not the kind of investment we need as a lower middle income country,” he said.

The country, he said, no longer has access to concessionary loans due to its attainment of lower middle income status, a situation which makes the injection of private capital into the power sector a critical need.

“We are in a very peculiar position and therefore if we are going to wait for allocation from the Ghana government budget it is not going to happen, and ECG will tell you they will need US$400million per year for the next ten years, which is money we do not have.”

To a large extent, the ECG is believed to be the one entity holding that is holding back other entities in the power sector due to its ability to timeously pay generators.

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Government is said to be indebted to the ECG to the tune of about US$500million, while a number of private entities and individuals owe it significant amounts of money.

An audit exercise conducted by the company found that consumers tapping power illegally owe it a little over GH¢3million, which is the equivalent of consuming 5,106,837kwh of power.

With every one percent of system loss translating to GH¢18.4million, it is estimated that the activities of dodgy power consumers cost ECG some GH¢444.912million last year. -

According to MiDA, the private entity that will be chosen would have to invest in technology that would cut out the various forms of power and revenue losses at the ECG.

MiDA’s CEO Owura Kwaku Sarfo, said the concession arrangement will see the injection of much needed capital into the power distribution system to help bring an end to the perineal electricity shortages.

“The concessionaire, apart from managing, will have to put in investments; and once they put in investments, they have to ensure that the company is profitable. It is only when the company is profitable that they will be able to get their own returns back, and therefore this arrangement is a much better one than the management contract,” Ing. Sarfo told the B&FT.

Source: B&FT
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