The Cash Waterfall Mechanism (CWM) report for January 2024 has revealed significant non-compliance with the formula for revenue allocation and disbursements to power sector players.

Specifically, IC Research, said out of the GH¢820.45 million revenue reported by the electricity distributor for January 2024, the CWM stipulated GH¢512.84 million payment to six Independent Power Producers (IPPs) as Level A beneficiaries.

The remaining GH¢307.61 million was to be paid to State Owned Enterprises (SOEs) and other Level B beneficiaries while the Ministry of Finance provides GH¢200.31 million to cover the payment shortfalls for the invoices submitted.

However, it said only four IPPs in the Level A beneficiaries received actual payment with a total of GH¢120.0 million, representing 23.4% of the CWM allocation while the Level B beneficiaries received GH¢162.05 million (52.7% of allocation in the CWM).

This non-compliance with the CWM, it revealed, resulted in a shortfall of GH¢392.84 million due Level A beneficiaries and GH¢145.56 million due Level B beneficiaries during the January 2024 payments (for November 2023 invoices).

“Evidently and as a complement to the quarterly cost-reflective tariff reviews, we believe the authorities would need to strictly enforce compliance with the CWM to avoid build-up of payment shortfalls”.

The Cash Waterfall Mechanism was implemented in April 2020 by the government as part of the Energy Sector Recovery Programme (ESRP) to ensure fairness and transparency in distributing energy revenues among electricity distribution companies.