The Worldwide Financial Fund (IMF) has endorsed the liberalisation of the operations of the Electrical energy Firm of Ghana (ECG), the State-owned electrical energy distributor, for personal sector participation.
The Fund is of the view that personal sector participation would entice the much-needed funding and technical experience to handle legacy money owed, making the vitality sector financially sustainable.
This was within the IMF July nation report on the fourth evaluate of the Ghana’s US$3 billion-three-year Prolonged Credit score Facility (ECF) association, which recognized the vitality sector as a significant supply of fiscal threat.
The Electrical energy Firm of Ghana is accountable for distributing electrical energy within the southern a part of Ghana, overlaying six administrative areas: Larger Accra, Jap, Volta, Ashanti, Western and Central.
In accordance with the Fund, within the absence of any coverage motion, the annual vitality sector shortfall is estimated to succeed in US$2.2 billion in 2025.
That mirrored ECG’s massive industrial and technical losses and sluggish electrical energy tariff adjustment within the face of trade price fluctuations and better energy era prices, notably resulting from reliance on expensive liquid fuels, the IMF noticed.
“Employees welcomes the cupboard choice to open the electrical energy firm’s operations to the non-public sector, and the efforts made in direction of the vitality sector’s monetary sustainability -including resuming the quarterly electrical energy tariff will increase,” the Fund acknowledged in its appraisal on the ECF programme.
The IMF noticed progress in decreasing the vitality sector challenges together with the 14.75 per cent improve in electrical energy tariffs in April 2025 by the Public Utilities Regulatory Fee (PURC) and compliance enchancment with the Money Waterfall Mechanism considerably in 2025.
Nonetheless, the report indicated that “some IPPs acquired lower than anticipated, as gasoline funds and the addition of an IPP diluted Money Waterfall Mechanism distributions.”
There have been vital deviations between ECG’s validated and declared collections (GHS5.3 billion) and between CWM allocations and precise funds (GHS3.9 billion), the report famous.
To scale back the vitality sector shortfall within the quick time period and improve effectivity, the Bretton Woods establishment really helpful a full and constant implementation of the Money Waterfall Mechanism.
That suggests the nation making certain common funds to Impartial Energy Producers (IPPs) and gasoline suppliers, addressing legacy arrears, and enhancing transparency, governance and accountability.
The IMF urged the Authorities to speed up the implementation of the Vitality Sector Restoration Programme measures, together with conducting a multi-year tariff evaluation to replicate adjustments within the prices of vitality manufacturing by end-September 2025, improve income assortment and restrict arrears accumulation.
In an earlier interview with the Ghana Information Company, Nana Amoasi VII, the Government Director, Institute for Vitality Safety, stated privatisation may herald experience, funding, and effectivity enhancements which might be wanted to handle infrastructure challenges and enhance service supply within the energy sector.
Referring to the 2019 failed settlement with Energy Distribution Companies (PDS), he known as for a well-designed, clear, and finest practices to keep away from the pitfalls skilled prior to now deal.
The failure of PDS to attain sure pre-conditions led to the nation lacking some US$190 million in funding below the second tranche of the Millennium Problem Company (MCC) energy compact.
Ms Alice Albright, Chief Government Officer of MCC, on Thursday, Could 9, 2024, acknowledged that the Company had no fast plans, however remained opened to working with Ghana for long-term sustainability of associated infrastructure and monetary restoration within the vitality sector.
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