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Home Headlines President Mahama Engages IPPs to Address Ghana’s Energy Sector Challenges

President Mahama Engages IPPs to Address Ghana’s Energy Sector Challenges

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President Mahama Meets Independent Power Producer
President Mahama Meets Independent Power Producer

President John Dramani Mahama has convened a meeting with Independent Power Producers (IPPs) to discuss longstanding issues plaguing Ghana’s energy sector, with a particular focus on the financial sustainability of the Electricity Company of Ghana (ECG) and the broader power distribution framework.

The meeting, held at the President’s office, marks the start of what Mahama described as a new chapter in the governance of Ghana’s energy sector. In his opening remarks, the President highlighted critical reforms needed to address inefficiencies, procurement irregularities, and revenue losses at the ECG.

Mahama underscored the urgent need for structural changes, noting that the sector’s current state, particularly with ECG’s 40% commercial and technical losses, was unsustainable. He stressed, “If you make 40% commercial and technical losses and continue to think that you have a viable business, something must give in that sector.”

The President also revisited past efforts aimed at integrating the private sector into electricity distribution, referencing the controversial Power Distribution Services (PDS) deal, which was terminated under the previous administration. Mahama acknowledged the flaws in the PDS arrangement but suggested that private sector involvement had demonstrated the potential for better revenue collection.

“Even as irregular as PDS was and as inefficient as it was, you could see an increase in the revenue that was being collected,” he stated. “If we do it more transparently, more fairly, and more competitively, I’m sure that we’ll get an efficient partner to join us in terms of billing and metering.”

The discussion also centred on the need for more effective governance reforms at ECG. Mahama criticised the company’s procurement practices, questioning why it would purchase items years in advance without a clear necessity. He also called for the better implementation of the cash waterfall mechanism, aimed at ensuring timely payments to IPPs for their services.

“We can start to look at their procurement systems,” he said. “Why would you procure items that you don’t need until five years or six years after? So much of the revenue that is collected must go to pay for power that is generated.” The President added that his administration would work with the IPPs to improve cash flow and resolve outstanding debts.

In a show of commitment to reform, Mahama assured the IPPs that his administration is determined to turn a new page in energy governance. “As I said in my inaugural address, Ghana is open for business again,” he remarked, acknowledging the frustration of the IPPs over delays in payments and investment recoveries. He promised to work closely with them to address these challenges and ensure a more sustainable energy sector moving forward.

This meeting marks a critical step in President Mahama’s efforts to address the deep-rooted issues facing Ghana’s energy sector, with an emphasis on creating a more transparent, efficient, and financially viable power distribution framework. The President’s engagement with the IPPs signals a renewed commitment to resolving the challenges in the sector and creating a more sustainable energy future for the country.

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