Finance Expert and former Executive Director of the Standard Chartered Bank, Mr Alex Mould, has reiterated calls for the need to set up a trustee to manage the power sector revenue collection account.
His comments come after government detected fundamental and material breaches of the Power Distribution Service (PDS) obligations in the provision of payment securities (Demand Guarantees) for the transactions.
The detections led to an ECG retaking over power distribution.
The status quo (current funds collection and distribution mechanism), according to Mr Mould, is flawed with deliberate delays which caused unnecessary float interest revenue for the collecting company (then ECG and now PDS).
That, he alleged, was all done in collusion with the banks which enriches them (the Banks and PDS (ECG) at the expense of the other power sector service providers who are always short of liquidity.
Additionally, he called for the urgent need for the institution of a Cash Waterfall Mechanism (CWM) to prevent the growth of the energy sector-wide indebtedness.
CWM, Mr Mould explained, is a protocol to ensure that all players in the power sector value chain that supplies electricity to our homes, offices and industry, are paid on time without the unnecessary interference by the government or any institution that collects the revenue on behalf of the service providers.
In July 2017, Cabinet approved the implementation of CWM as a new revenue distribution system to address the increasing legacy debts in the energy sector.
This mechanism is part of a wider strategy to ensure an equitable distribution of energy sector revenues to all stakeholders in the value chain.
But Mr Mould in an interview alleged, “there seems to be some reluctance by the Finance Minister to set up the Collection Account and also set up an agreed protocol for the distribution of the proceeds on a timely basis to the service providers in the power sector.”
He said there was no other reason for “this self-imposed inertia apart from the fact that this is part of the jigsaw puzzle in the grand scheme to perpetuate State Capture in the Power Sector.”
Mr Mould, who is also the immediate past Chief Executive of the Ghana National Petroleum Corporation (GNPC) claimed that, the main interest of the Power Distribution Services (PDS) was to control and profit from the liquidity generated from the sale of electricity.
“PDS plans doing this by having one or two banks handling all its cash collections and thus be able to control the liquidity generated by the power sector to the detriment of the power service providers like VRA [Volta River Authority], GRIDCo [Ghana Grid Company], the Independent Power Producers and the Fuel Suppliers i.e Ghana Gas, GNPC and NGas [Nigeria Gas Company],” he added.
He stated that the power sector revenue collection account had not been set up nor “have the procedures and protocols for payments to the service providers in the power sector value chain been set up.”
This should be managed by a Trustee comprising of the major players in the industry which seeks the interest of the viability of the players in the power sector with the goal of restoring the much needed financial credibility and creditworthiness.”
The delay, according to him, was causing further delays in payments to the main players in the value chain “which translates in higher financial costs and lack of liquidity to carry out their businesses effectively and efficiently.”
That, Mr Mould, said was a breach of one of the conditions set by the World Bank in order to assist in improving the efficiency of the Power Sector.
“One of the conditions by the World Bank to assist in improving the efficiency of the power sector was to ensure that the right tariffs were paid and that an efficient payment mechanism is set up,” he recollected.