Saturday, November 10, 2018

ECG, VALCO owe GRIDCo GH¢882m

11:29:00 AM


Debts owed by the Electricity Company of Ghana (ECG) and the Volta Aluminium Company Limited (VALCO) to the Ghana Grid Company Limited (GRIDCo) continue to severely affect the operations of the company, the Chief Executive Officer (CEO) of the company, Mr Jonathan Amoako-Baah, has said.

The ECG and VALCO owe GRIDCo to the tune of GH¢862 million.

Although GRIDCo made total revenue of GH¢715.2 million in 2017, representing a 6.14 per cent increase over the 2016 revenue of GH¢673.83 million, the company made a net loss of GH¢31 million due to the huge debts and interest on loans.

Making this known at the ninth annual general meeting of the company in Accra yesterday, Mr Amoako-Baah said the debts owed by the two companies, among other challenges, affected GRIDCos performance and obligations to its stakeholders.

Operational performance

Additionally, he said, the inclusion of interest on loans which were contracted for the West Africa Power Pool (WAPP) and inherited from the Volta River Authority (VRA), as well as the penalty imposed by the Ghana Revenue Authority (GRA) on GRIDCo for delayed payment of corporate taxes, also accounted for the net loss of the companys operations in 2017.

In spite of the challenges, he said, the company made some strides, as it was adjudged by the Association of Ghana Industries (AGI) as the 2017 Company of the Year, indicating its adherence to best practices in its operations.

On the operational performance of the company in 2017, Mr Amoako-Baah said the company transmitted a total of 14.31 terawatt hours (TWh) of energy on its transmission network and recorded transmission losses of 0.59TWh, representing 4.10 per cent of the total energy transmitted.

Going forward, Mr Amoako-Baah said the company would continue to reinforce and modernise its transmission systems to ensure reliable evacuation of power to meet the growing demand for electricity.

Clearing the debts

A Deputy Minister of Energy in charge of Finance and Infrastructure, Mr Joseph Cudjoe, expressed concern about the net loss made by the company, saying that moving from a profit of about GH¢69.1 million in 2016 to a loss of about GH¢31 million in 2017, a significant portion of which is attributed to cost of financing, particularly exchange loss on borrowing, is worrying.

He said the government was making efforts to address the build up of debt within the power sector that was stalling some of the projects being implemented across the country to improve on power supply reliability.

As part of initiatives to pay the debts in the power sector, Mr Cudjoe said, the government was implementing the Cash Waterfall Mechanism, a new revenue distribution system for the power sector which would ensure the equitable distribution of all energy sector revenues to all stakeholders in the value chain.

 Additionally, the Ministry of Finance is in the process of raising the balance of the first tranche of the GH¢6 billion Energy Sector Levy Act (ESLA) bond to ensure that stakeholders like GRIDCo also receive their due portions, he added.

Again, he said, the government was working to clear some debts inherited by GRIDCo from the VRA which were still in its books, affecting its financial statement.

Furthermore, Mr Cudjoe said, the Ministry of Energy was in talks with the Ministry of Finance and the Public Utilities Regulatory Commission (PURC) to ensure that the automatic adjustment formula of tariffs was enforced to address the issue of exchange loss on borrowing.

To ensure efficiency, Mr Cudjoe urged the company to implement stronger budgeting and approval processes and also incentivise performance through performance contracts.

He urged the company to focus not only on the transmission service charge that it earned supplying power to its customers but also tap into other areas to boost its revenue base.

GRIDTel

In his statement, the Board Chairman of the company, Mr Kabral Blay-Amihere, said the GRIDCo Telecommunications Business Unit, GRIDTel, which was operationalised in 2017, had obtained a licence from the National Communications Authority (NCA) to build and operate a national terrestrial fibre network.

He said GRIDTel was poised to collaborate with stakeholders in the industry to bridge the digital divide in Ghana.


By Ghana Leaks Blog


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