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12.03.2013 Business & Finance

Govt Must Settle indebtedness to VRA, ECG to Warrant Tariff Increases

LISTEN MAR 12, 2013

Hohoe, March 11, GNA - Africa Centre for Energy Policy (ACEP) has appealed to the government to demonstrate its commitment to the power sector by settling its indebtedness to the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG).

It said government's continuous indebtedness to VRA and ECG is a looming danger capable of collapsing the power sector.

A statement signed by Mr Mohammed Amin Adams, Executive Director of ACEP and made available to the GNA, said increasing generation capacity is laudable but securing the fuel to fire the generation plants is equally vital, which require uninterrupted cash flow to operate.

It said records show that government is indebted to the ECG totalling US$ 500 million with the private customers owing about GHC 200 million. ECG also owes VRA about US$ 400 million

The statement said tariffs needed to be cost-based with automatic adjustments mechanisms while maintaining subsidies for lifeline consumers.

The statement suggested recruitment of competent management and the signing of performance contracts for easy evaluation.

The statement urged the Public Utility and Regulatory Commission (PURC) to incorporate customer satisfaction index in the tariff regime and penalize service providers based on customer assessment of quality service delivery.

It said the indebtedness of ECG and government to the VRA has undermined VRA's liquidity position and a drawback to private investment in power generation.

It said only Asogli-Sunon and CENIT, out of eight other Independent Power producers who are signatories to the Power Purchase Agreement with Ghana, have invested in the energy sector.

'This is because ECG failed to demonstrate it can purchase power produced by the private companies.'

The statement said it was untrue that indebtedness by private customers was responsible for the financial difficulties and based on which tariffs adjustments are justified.


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