The Finance Minister, Dr. Cassiel Ato Forson has described Ghana’s energy sector as a ticking time bomb, warning that inefficiencies within the system are costing the country approximately 2% of its Gross Domestic Product (GDP) annually.
Speaking at the National Economic Dialogue, Dr. Forson expressed concerns over the failure of the Energy Sector Recovery Programme to meet its objectives, stressing that urgent and radical reforms are needed to salvage the situation.
“The energy sector in Ghana has become a ticking time bomb, costing about two percent of GDP every year. The objectives of the Energy Sector Recovery Programme are completely off track. Fixing the sector requires radical measures,” he stated.
The minister identified high generation costs, lack of competition, and limited renewable energy capacity in the energy mix as key problems affecting the sector. Additionally, he highlighted inefficiencies in the Electricity Company of Ghana (ECG), particularly its high distribution and collection losses.
According to Dr. Forson, ECG is only able to collect 62% of the total energy it purchases, and out of that, 65% is used to pay suppliers through the cash waterfall mechanism. He criticized the remaining 35% of ECG’s revenue, which he claimed is being misused on unnecessary expenditures.
“Currently, only 62% of total energy purchased by ECG is collected. And even out of the 62%, 65% of that amount is used to pay suppliers through the cash waterfall mechanism. Unfortunately, 35% of ECG’s revenue is used to take care of themselves over things they don’t actually require,” he said.
Despite these challenges, Dr. Forson firmly rejected the idea of increasing electricity tariffs to compensate for ECG’s inefficiencies. “I still maintain that tariffs should not be used to reward ECG’s inefficiencies and inefficiencies in the system,” he asserted.
Source: Ghana/Starrfm.com.gh/103.5FM/Deborah Amuzu
