Business News

GRIDCo banking on refinancing module to deal with debts

The Ghana Grid Company (GRiDCo) has disclosed that it is presently unable to expand its transmission lines due to its high indebtedness.

As it stands, GRIDCo is owed over GHc 600 million and the Electricity Company of Ghana (ECG) is a major contributor to this debt, according to Chief Executive of GRIDCo, William Amuna, who was speaking before Parliament’s Public Accounts Committee on Monday.

“The Electricity Company of Ghana continues to build up the debt and unfortunately, we are unable to disconnect them because of you disconnect ECG, it will have a domino effect… virtually everything will come to a stall.”

GRIDCo can opt to disconnect consumers, as happens in its dealings with mining companies when payment is not coming, but in the case of ECG, it has to resort to “other means to get the monies back.”

The company is, therefore, looking forward to the speedy implementation of the energy sector refinancing module that “will ensure that everybody within the energy sector is paid whatever is owed.”

READ ALSO:   Light Won’t Be Back By 10am – ECG Contradicts GRIDCo

The Volta Aluminum Company (VALCO) also owes GRIDCo in excess of $20 million though “they are operating one port line so it is not much of problem to us,” Mr. Amuna said.

“So we are just banking on the [Energy] ministry coming out with this new arrangement [energy sector refinancing module] to ensure that we get our monies.”

The Director of Finance at GRIDCo, Isaac Kwame Akesseh also explained that the energy sector refinancing module.

“Currently there is an ongoing refinancing where the government is trying to refinance the energy debt stock and as part of the arrangement, there is also going to be put in place a cash waterfall arrangement; where an independent body will do the collection and does the allocation to the various entities as agreed [via a formula].”

Failings at ECG
Some analysts in the energy sector are, however, sceptical  this cash waterfall mechanism to help the power sector will yield little results if the ECG fails to improve its revenue collection.

READ ALSO:   Woman Dies After Sex

They believe ECG was should overcome the underlying challenge of revenue mobilization and this should translate to the prompt settlement of monies owed all agencies in the supply chain.

The failure of ECG to collect power consumed and pay its creditors has led to major difficulties for players in the energy sector, hampering their operations.

At present, the government is faced with a legacy debt of 2.4 billion dollars sitting on the books of banks.

By: Sixtus Dong Ullo/Delali Adogla-Bessa/