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Analyst calls for transparency in repayment of energy sector debt

By: Jessica Acheampong
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Dr Steve Manteaw
Dr Steve Manteaw

Energy sector policy analyst, Dr Steve Manteaw, wants the government to come clean on how much of the energy sector debt has been repaid since the introduction of the Energy Sector Levy Act (ESLA).

He said although the government had been transparent about how much had been collected through the levy, it was silent on the status of the debt and when it will be paid fully.

This, Dr Manteaw believed might  lead to the recurrence of how Ghanaians have paid the Tema Oil Refinery (TOR) Debt Recovery Levy for a long time and in 2019, they are still paying.

In an interview on the sidelines of a workshop by the Institute of Financial and Economic Journalists (IFEJ) and GIZ in Koforidua, he said, it was important for the government to give a status report on the energy sector debt in a bid to promote transparency.

“We do not have enough transparency in terms of how much resources are accruing to the energy sector levy fund and how these resources are being applied to defray the debt.”

“I would actually advise that from time to time, be it quarterly or on an annual basis Ghanaians should be told how much has accrued to the fund, how much has been paid to defray the debt and how much of the debt remains outstanding and at the current rate of repayment, how long it will take to clear the entire debt so that the Ghana National Gas Company (GNGC) becomes a viable entity,” he said.

 In the absence of these disclosures, Ghanaians, he said are not able to make informed judgment in terms of how well the country was doing in liquidating the GNGC debt.

The ESLA
The government passed the new Energy Sector Levies Act (Act 899) in December 2015 and it took effect on January 4, 2016.

The 2019 budget of government said it was on track with its strategy to use the proceeds accruing from the Energy Sector Levies to support the restructuring of energy sector State Owned Enterprises (SOEs), as well as facilitate sustainable investments in the sector.

It said a total amount of GH¢3.507.01 million was programmed for collection in 2018. Actual collections as at end-September 2018 amounted to GH¢2,334.69 million, while lodgments into the established and other ESLA accounts amounted to GH¢2,339.51 million. Total lodgments were higher than collections by GH¢4.82 million (0.21%) as a result of the distribution of 2017 ESLA balances accrued into the Energy Debt Recovery Levy (EDRL) Account in the first quarter of 2018.

Growing debt
The Volta River Authority’s (VRA) cumulative indebtedness to the GNGC stood at US$731.35 million according to the 2018 semi-annual report of the Public Interest and Accountability Committee (PIAC) – the committee with oversight responsibility over the management of the country’s petroleum resources.

Cycle of growing debt
Dr Manteaw described the growing debt as a chain which required that the sector ministry adopts a better approach to deal with the situation.

“What the GNGC does is to process the gas into lean gas and sell to the VRA.The VRA takes the gas and turns it unto power to the Electricity Company of Ghana (ECG).The ECG distributes the power to us and we pay our bills but ECG says that it is not able to collect enough so it makes no payment to the VRA as a result it is also not able to pay the GNGC for the fuel it procures.”

“It is a chain and I think the sector ministry would have to sit back and look at how we address the vicious cycle of the indebtedness,” he said.