Cedi depreciation, economic mismanagement to blame for energy sector debt – Kwabena Donkor

The former Minister of Power, Dr. Kwabena Donkor, says the exchange rate volatility is the major contributing factor to the huge debt crippling the energy sector.

The World Bank Country Director, Pierre Frank Laporte, accused the Mahama-led government of contributing to the current economic difficulties as a result of the Power Purchase Agreements (PPAs) signed under a take-or-pay agreement, which committed Ghana to pay for excess energy it did not need.

Describing Mr Laporte’s assertion as factually incorrect, Dr. Donkor said the mismanagement of the economy has impacted the government’s ability to pay for generated power.

The former Power Minister said the challenges confronting the PPAs are a result of the free fall of the cedi, not the alleged mismanagement as Laporte claims.

“The Dollar-Cedi exchange rate was GH¢4.14 but as of June 4, the exchange rate was GH¢11.193 to the Dollar. Remember that power purchasing agreements are signed and paid in Dollars. ECG’s collection is in Cedi and therefore, when we mismanage the economy, it impacts our ability to pay for the power we generate. So I would have expected the World Bank country director to lay more emphasis on managing the economy to attain a stable exchange rate. The exchange rate during this period has tripled and thus, the PPA. The deteriorating exchange rate has rather affected the tariff of the PPA.”

“The World Bank, the IMF, and the Ministry of Finance have failed to manage an efficient economy and run an economy that creates confidence to warrant a stable exchange rate, so I will really want the World Bank country director to come again than to go around throwing partisan punches,” Mr. Kwabena Donkor added.