Dr Mahamadu Bawumia, vice presidential candidate of the New Patriotic Party (NPP), says government has poorly managed the country’s energy sector which continues to be plagued by generation shortfalls, corrupt procurements, frequent power cuts, inefficiencies and unsustainable debts.
Speaking on the state of the economy recently in Accra, Dr Bawumia said while government was engaged in questionable power procurements, dedicated state-owned power infrastructure, from which revenue was generated by the country’s utilities, were collapsing.
“Akosombo has constantly been over- drafted, thermal plants are frequently breaking down; and all our plants operate below capacity. The Takoradi 3 thermal plant has been shut down although it was commissioned only two years ago.
“Therefore, in spite of the fact that our country has a total installed capacity of about 3000MW, available capacity is under 2000MW.”
Weak generating plants
The poor maintenance and management of the country’s generation plants have weakened the sector, further undermining long-term expansion and energy security, whilst demand for electricity grows at 12 percent annually, according to him.
“Ghana’s industrialization agenda is clearly in danger.”
VRA under threat
He said the energy sector currently faces an unprecedented financial crisis, adding that the very existence of Volta River Authority (VRA) was under serious threat, as its debts continue to increase.
“VRA’s debts are reported to be between $1.5 billion and $2 billion. The cost of electricity to industry has been alarmingly high, and this has led to the collapse of some factories and relocation of others to our neighboring Ivory Coast.
“The problems in the energy sector have led to five years of “dumsor” which has brought unprecedented devastation on our industries, particularly small businesses, job losses, income losses, deaths in our hospitals, disruption of life and destruction of electrical appliances of businesses and homes cannot be fully quantified.
“We have collectively paid a heavy price for the mismanagement of this government,” he noted.
Gov’t credibility
“The government appears to have reneged on an understanding it had with the IMF with regards to the recently passed Bank of Ghana Act and the Public financial Management Act. This quite clearly is bad faith and undermines the credibility of government.”
Diversion in Eurobond use
He also touched on the diversion of the 2015 $1 billion Eurobond proceeds.
“The prospectus to the Eurobond issue clearly specified what the money was to be used for. Specifically, the prospectus states that: “The Republic expects the net proceeds of the issue of the notes to amount to approximately $958,517,630, which the Republic expects to utilize to repay outstanding domestic debt of the Republic.”
Dr Bawumia said it was clear that government did not quite use the proceeds for the intended purpose.
He also made reference to an admission by the Finance Minister during a press conference on August 24, 2016 on the $1 billion Eurobond.
Terkper’s own words
“We spent just about $500 million, and carried the remaining $500 million as a buffer as we go into zero financing. So that when we have uncovered auction, we are able to use the World Bank money which we should have used entirely for domestic to get into that policy to ride on that policy.
“What the Minister has admitted is simply unbelievable. You go on to the international capital market and borrow at 10.75 percent and decide to park those funds as idle funds in the Bank of Ghana just in case you have an auction failure? Why borrow funds at such a high rate if you have no use for them?” he quizzed.
By Samuel Boadi