The Electricity Company of Ghana (ECG) says it has complied with the Public Utilities Regulatory Body’s (PURC) order to pay all tariff revenues as prescribed and allocated under the Cash Waterfall Mechanism (CWM) to secure the financial integrity of the sector.
This is contained in a letter exclusively available to 3news.com.
The letter signed by the Managing Director, Mr. Samuel Dubik Mahama, was in response to an 8-page statement issued by the PURC dated March 18, 2024.
In his response, Mr Mahama wrote, “Some challenges with the implementation of the CWM were tabled by ECG and accepted by the CWM Implementation Committee on 26th March 2024. Consequently, ECG is complying fully with the CWM approved model going forward.”
The ECG MD detailed some of the issues they raised to the Implementation Committee Members as follows:
a. Treatment of Early Power as Tier 1 Beneficiary
The inclusion of Early Power in Tier 1 Payments is based on the fact that ECG has a Take or Pay PPA with Early Power. In addition, Early Power generated GWh77.7 of electricity valued at USS5million for December 2023 and January 2024 which bill is due for payment hence demand notice served on ECG to that effect. The position of ECG is that, as has been done for all other IPPs, the same treatment should be accorded Early Power to avoid accumulation of debt.
b. Treatment of WAPCo
The inclusion of WAPCo in Tier 1 Payments is based on two directives issued by the Minister of Energy. First, WAPCo should be included in Tier 1 Payments Second. Payments to WAPCo should be made in US Dollars and directly to WAPCo. The account details of WAPCo which is now with ECG is a US Dollar Account.
c. Loan Repayment for Bui Power Authority and Ghana National Gas Company Limited
To recall, loans were contracted by Bui Power Authority and Ghana National Gas Company Limited to address pressing financial challenges both companies were facing. By an agreement between ECG and the two Institutions, these loans were novated to ECG for payment of both Principal and Interest as and when due. The total amount contracted by the two Institutions is GHS250 million (Bui Power Authority GHS150million and Ghana Gas Ghana Limited GHS100million respectively).“
Mr Mahama further explained in respect of the loan repayment for Bui Power Authority and Ghana Gas that “In executing the terms of the loan agreement, ECG has since been making payments as and when due, which fact can be verified from the beneficiaries. It is therefore prudent to address the issue of the repayment of the loan as part of the CWM payments so as to avoid placing ECG in a precarious financial position, failure to address these issues is very much likely to result in accumulation of debt, since ECG has no other source of revenue generation to pay both the principal and the interest.”
The ECG also explained that it published planned maintenance works at various operational areas to inform customers about interruption in power supply.
This is in respect of the specific request for “Evidence of publication of Load management timetable corresponding with the timelines and duration of each transformer injection to consumers.”
The Managing Director of the ECG wrote, “In line with the response to 2.3e above, find attached soft copies of publications on planned maintenance at various facilities within ECG’s operational areas. Copies of the publications are attached…”
“ECG wishes to communicate that the practice over the years for transformer injection works, is to send notices on planned maintenance to customers. ECG does not give notices for individual transformer injections. Upon issuance of notices for planned maintenance, ECG goes ahead to carry out substation maintenance works, underground cable fault repairs, overhead line fault repairs. damaged pole replacements, transformer injections, etc,” Mr. Mahama stated.
This letter notwithstanding, on March 28, the PURC had cause to threaten to issue regulatory action against the ECG for non-compliance.
The PURC stated in an update that it has observed that the Electricity Company of Ghana (ECG) has failed to comply with its directive to release a load-shedding timetable corresponding with the timelines and duration for each transformer injection.
The regulator says it has not seen any evidence of the publication of the load management timetable.
PURC to take regulatory action against ECG for not releasing load-shedding timetable
In reaction to that, the Commission said it “is finalizing regulatory action on the above.”
It would be recalled that on March 18, 2024, the Public Utilities Regulatory Commission (PURC) ordered the Electricity Company of Ghana (ECG) to comply with the Cash Waterfall Mechanism (CWM) and pay all tariff revenues as prescribed and allocated under the CWM to secure the financial integrity of the energy sector.
PURC bares its teeth at Electricity Company of Ghana over erratic power supply situation
According to the PURC, the objective of the CWM is to ensure fair and equitable allocation of revenues accruing from electricity tariffs it has approved as well as ensure that ECG distributes the tariff revenues it collects among all sector players along the electricity value chain.
PURC updates public on ECG’s compliance with Cash Waterfall Mechanism procedure | 3News
The order became necessary because while the ECG has cited overloaded transformers as cause of the prevailing erratic electricity supply situation, other stakeholders such as the African Centre for Energy Policy (ACEPA) and the Minority in Parliament have blamed the situation on debt owed Independent Power Producers (IPPs).
With regard to “Compliance with CWM Mechanism and payment of tariff revenues as prescribed”, Mr Mahama responded to the PURC thus, “ECG complied with this order on 26. March, 2024. The State-Owned Enterprises (SOEs) have been paid. The Independent Power Producers (IPPs) have also been paid their due amounts in Ghana Cedis. For those IPPs that have to be paid in United States Dollars (USD), the Bank of Ghana (BoG) is working on paying the dollar equivalent of payments due.”
