The Africa Centre for Energy Policy (ACEP), in its analyses of the 2019 budget statement and economic policy of the government of Ghana on 20th November, 2018, has recommended that, government should suspend the sale of VRA thermal Plants.

According ACEP, government planned on divesting its interest in the thermal plants of VRA. However, when sold to private companies, it will require additional Power Purchase Agreement with take or pay conditions.

This the centre said, “Will increase the surplus requirement and consequently, government’s commitment to capacity charges. Government can rather retire the plants for emergency use and allow IPPs to generate power for domestic consumption. This will ensure that the IPPs do not become idle and still get paid.”

ACEP also recommended that, government should increase the hydro Tariff for VRA and assign cheap power for industry. Saying, “The need to consume the excess capacity requires that industry benefits from cheaper power to increase consumption and productivity. Government should increase the hydro tariff to offset the loss of revenue to VRA for shutting down their thermal plants. Government can then blend some thermal plants from the IPPs with VRA’s hydro to achieve internationally competitive tariff for heavy industry.”

It also said, government should develop a robust mechanism to monitor the availability of power plants, where the Energy Commission will have a robust dispatch monitoring system for all the IPPs to ensure that all plants declaring availability are genuinely available. “This will prevent invoices from plants that are not supposed to bill the consumer,” it added.

With respect to the oil revenue, ACEP urged government to check the deliberate use of oil revenue for debt servicing at the expense of public investments, and the regulations to the PRMA should also be passed to define rules for capping the Ghana Stabilization Fund (GSF). This, the centre said, will bring clarity to the basis for capping and remove perceived discretionary powers of the Minister in the treatment of oil revenues and the GSF.

According to ACEP, “To prevent encumbrances of unutilized ABFA, the Ministry of Finance must ensure that existing infrastructure projects yet to be completed are adequately funded by the ABFA. Fully utilizing ABFA will prevent time and cost overruns of existing uncompleted projects.”

Find The Full Analysis Below;
ACEP’s Comments on 2019 budget

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