Power sector needs huge capital investment to survive - Report

The Institute for Energy Policies and Research (INSTEPR) has raised concerns on the need for the power sub-sector to be given critical attention and resources to save it from collapse.

The Institute named capital investment as a major item needed for the survival of the power sector in 2021 and beyond.

According to INSTEPR’s 2021 Outlook and Expectations in the Energy Sector report, it stated that if no action was taken, the indebtedness within the power sector could reach $12.52 billion by 2023.

This, the research institute has equated it to be about 18.7 percent of the country’s current Gross Domestic Product (GDP).

"The Independent Power Producers (IPPs) have an unpaid invoice of up to $1.44 billion as of September 2020, according to CIPDiB. This debt keeps growing though the Cash Waterfall Mechanism has been implemented since April 2020.

"The total revenue collected by ECG from consumers is not enough to meet the invoices from various stakeholders in the value chain. This is mostly to do with the technical and commercial losses experiences in Transmission and Distribution," the report said.

The report also indicated transmission losses of 4.7 per cent this year, which was 1.8 per cent higher than the projected losses of 2.7 per cent.

Distribution losses also increased to 26.63 per cent as against the regulatory benchmark of 23.2 per cent, according to the report.

The report further urged government to give a clear indication on how the new policy of 'TAKE AND PAY' would be implemented for the existing Power Purchase Agreements (PPA) which had 'TAKE OR PAY'.