The Africa Centre for Energy Policy (ACEP) has urged the Akufo-Addo-led government to prioritise solutions for problems in the energy sector, which has the potential of damaging its development plans.
“The challenges of the energy sector are many, with alarming signals that could derail the national economy into distress for a very long time,” Deputy Executive Director of ACEP Benjamin Boakye indicated at a press conference in Accra yesterday.
According to the ACEP, the energy sector also has the potential to transform the economy so government should institute the right structures to make gains from the sector.
“This ‘double-edged sword’ situation requires efficient leadership that can carefully align the energy sector decisions with the rest of the economy.
The energy sector situation requires that the government takes significant interest in aligning the sector to the growth of the economy,” Mr Boakye added.
Mr Boakye enumerated financial challenges, fuel supply issues, cost of electricity and expensive power plant as some areas that needed attention.
ACEP further proposed some solutions including the removal of the price stabilisation levy.
For Mr Boakye, “this is an element of regulation which has no place in a deregulated market”.
He also proposed a conversion of the Special Petroleum Tax from 17.5 per cent to a fixed levy to eliminate the compounding effect of the tax on ex-depot price of products in the midst of rising crude oil price and a weakening cedi.
He noted that the challenges of the energy sector were many, with alarming signals that could derail the national economy into distress for a very long time.
He said the power sector challenges are far from over regardless of the relative stability in supply to consumers today.
“The additional generation capacity to the grid, no doubt, helped to provide power to replace unavailable power from T3 thermal plant, Akosombo, Kpong Hydro Plant, Asogli and others.
However, the other challenges such as financial distress of the utility companies, fuel supply security, high tariff, and suppressed demand, do not only threaten the stability of power supply, but explosion of the economy as a whole.”
According to Mr Boakye utility companies continue to reel under financial distress.
“The recent attempts at restructuring their indebtedness to the banks have not yet translated to improve relationship and confidence in the sector by the banks.
The Volta River Authority (VRA) for instance, still struggles to secure letters of credit to procure fuel for its plants.”
Mr. Boakye said the development was worrisome, particularly in the light of huge burden on consumers through the energy sector levies to normalise the situation. As a result of its financial challenges, VRA has missed important maintenance schedules which now threaten supply stability in the short term.