President peddled false energy debt figures in Canada - Minority

President peddled false energy debt figures in Canada - Minority
Source: Ghana|myjoyonline.com|edwin.appiah@myjoyonline.com
Date: 20-06-2019 Time: 02:06:48:pm
Ranking Member of the Mines and Energy Committee Adam Mutawakilu addressed the press

The Minority in Parliament has accused the President of peddling wrong energy sector debt figures when he spoke to Ghanaians in Canada.

The NDC MPs say the energy sector debts could not have been $5.2bn as President Nana Akufo-Addo claimed to have met after taking over power in 2017.

“His government inherited a $5.2 billion debt in Ghana’s energy sector from the previous Mahama-led National Democratic Congress (NDC) administration, half of which has been paid, while the remainder hanged on the neck of his administration like an albatross.” They quoted the president at a press conference called at Parliament Thursday.

The actual figure is $2.2bn, they say and their proof is provided by Nana Akufo-Addo in his own words to Parliament in February, barely a month after he was sworn into office.

In February 2017 when President Akufo-Addo delivered the State of the Nation Address (SoNA) to Parliament, he disclosed that “the power sector debt stood at $2.4 billion at end 2016”, Ranking Member of the Mines and Energy Committee Adam Mutawakilu addressed journalists.

Even with this $2.4bn, the Minority point out, it cannot be accurate because the Mahama government paid $250m to reduce the debt to approximately $2.2bn.

Debt politics is a key feature of partisan debates in Ghana. There is the energy sector debt, named legacy debt, to mean debts incurred by governments as far back as 1995.

To pay off these crippling debts on the books of energy companies, the government in 2015 passed the Energy Sector Levies Act (ESLA), a tool to raise money to clear the debts.

The Minority say government gets $590m from ESLA annually which should significantly reduce the remaining debt if the monies are properly applied.

They want the government to account for the funds from ESLA.

 

READ FULL STATMENT

MINORITY PRESS CONFERENCE HELD ON THURSDAY 20TH JUNE 2019. A CALL ON THE PRESIDENT TO REFRAIN FROM MISLEADING GHANAIANS ON ENERGY SECTOR DEBT

INTRODUCTION

Ladies and Gentlemen of the media, The Minority Caucus in Parliament has become very alarmed at the ever rising and crippling debt in the energy sector, over which President Akufo-Addo has failed to level up with the people of Ghana. At various fora, the President has sought to mislead the public about the exact state of affairs in the sector.


The President has often made inaccurate claims about the debt in the energy sector in a bid to conceal the true state of affairs. One of these inaccurate claims was his recent visit to Toronto, Canada where he said that “his government inherited a $5.2 billion debt in Ghana’s energy sector from the previous Mahama-led National Democratic Congress (NDC) administration, half of which has been paid, while the remainder hanged on the neck of his administration like an albatross.”

President  Akufo-Addo added that “the situations responsible for the constant power outages Ghanaians were forced to endure, were from the previous Mahama-led administration.”

The Minority does not only find these statements as inaccurate but also an attempt by the President to shirk responsibility for the incompetence he has displayed in the management of the country’s energy sector which remains a backbone to the Ghanaian economy.

THE FACTS AND RECORD

Ladies and Gentlemen of the media, enough records exist to show that the President peddled falsehood with respect to what has come to be called Legacy Debts, when he addressed a town hall meeting of Ghanaian residents in Toronto, Canada.

  • In February 2017 when President Akufo-Addo delivered the State of the Nation Address (SoNA) to Parliament, he disclosed that “the power sector debt stood at $2.4 billion at end 2016”
  • Also, in June 2017 when the President addressed the opening of the 2017 World Bank Development Finance Forum in Accra, he disclosed that government would soon issue a $2.5 billion bond to offset the Legacy Debt of the energy sector in order to create space for increased investment.

Today, the Minority Caucus is unable to accept the President’s claim of $5.2 billion energy sector debt created by former President Mahama during his tenure.

The Minority would wish to state the following facts, for purposes of setting the records straight:

  • The Legacy Debt of approximately $2.4 billion is a debt accumulated by successive governments between the years 1992 and 2015;
  • $250 million out of the $2.4 billion was paid to Banks by the Mahama-led government in 2016 to ease the liquidity crunch;
  • As at the end of 2016, the energy sector debt was approximately $2.2 billion;
  • At the exit of President John Dramani Mahama, the $2.2 billion amount was certified and agreed to be settled within 3 – 5 years starting from 2016, with the passage of Energy Sector Levies Act 2015, Act 899 (ESLA);
  • There was a Term-sheet of $600 million to pay-off suppliers, but this was delayed by President Akufo-Addo for more than a year;
  • Government rakes-in approximately Ghs 3billion ($590 million) annually from the ESLA Fund;
  • That, President Akufo-Addo inherited a “DUMSORLESS” economy in January 2017;
  • At the end of 2016, almost all the state-owned enterprises (SoEs) in the energy sector reported profits, showing strong sector performance;

 

Table 1: Profit/Loss of SoEs in Energy Sector Entity End

 

2016 Profit/(Loss)*

(Ghs)

End 2018 Profit/(Loss)*

(Ghs)

GRIDCo

69 Million

(118 Million) *

ECG/PDS

725 Million

(2 Billion) *

NEDCo

(1.19 Million) *

(163.7million)*

 

  • At the end of 2018, all state-owned enterprises (SoEs) in the energy sector reported losses, a clear sign of weak sector performance;
  • At the end of year 2018, the financials of these power sector entities have deteriorated, making it difficult to operate efficiently. The growing debts in the books of the utilities contribute to a large extent the “dumsor” we are currently experiencing.
  • Government’s debt to these entities is adding gargantuan liabilities to the existing Legacy Debt over a period of two and a half years.

 

Table 2: Government indebtedness to power sector entities

Entity

Government Debts at end 2018 (Approx)

Karpower

$150 Million

ENI

$160 Million

NEDCo

$162 Million

IPP’s

$1 Billion

GRIDCo

$171 Million

Ghana Gas

$735 Million

                             

This huge debt overhang is adversely affecting the viability and operations of the country’s energy sector companies and hindering their ability to function effectively and provide quality service to Ghanaians.

OUR DEMANDS

Ladies and Gentlemen of the media, the Minority Caucus in Parliament is therefore calling on President Akufo-Addo to:

  1. Provide further and better particulars on his claim that the NDC handed over a debt of $5.2 Billion in the energy sector;
  1. Account to Ghanaians on how the monies raised from the ESLA has been utilized;
  1. Explain to Ghanaians how the government intends to pay the debt owed the utilities to provide the required liquidity in the sector.

The Minority wish to assure President Akufo-Addo that it would expose any attempt to deceive Ghanaians, and to cover up the incompetence displayed in the governance of the country which has brought untold hardship on poor citizens.

We further put President Akufo-Addo’s government on notice that any misapplication of the ESLA inflows will be revisited by all means possible under the laws of Ghana when former President Mahama takes over Government on 7th January 2021.

 

CONCLUSION

In conclusion, the Minority Caucus in Parliament expects President Nana Akufo-Addo to take responsibility and address the liquidity and operational challenges in the country’s energy sector instead of carrying on with his nauseating blame game.

The President must show clearly how he intends to revive entities like the Tema Oil Refinery (TOR), and the Bulk Oil Storage and Transportation Company Limited (BOST); which were fully operational when former President John Dramani Mahama handed-over to him in January 2017.

Finally, the President must be explaining to Ghanaians how come being the luckiest government in our nation’s history by the following data on oil revenue:-

2016 - Gh¢972million

2017 -  Gh¢2.3billion

2018 - Gh¢4.5billion;

and yet his government has only colossal debt to show.

(Source: 2016, 2017 and 2018 Annual Reports on Petroleum Funds and PIAC Report).

Hon. Adam Mutawakilu

Ranking Member

Mines and Energy Committee

Parliament of Ghana.