The Minority in Parliament is calling for a thorough audit of Ghana’s energy sector to determine the full extent of its rising debt.
According to the caucus, the sector’s debt has surpassed $2 billion, a figure they attribute to what they describe as the government’s mismanagement of funds under the Energy Sector Levy Act (ESLA).
Furthermore, the group highlights the Ministry of Finance’s failure to settle GH¢1.8 billion in electricity bills owed by various Ministries, Departments, and Agencies (MDAs) since August 2023. This outstanding debt, they argue, has placed immense strain on the power sector.
Addressing the media, John Jinapor, Ranking Member of Parliament’s Energy Committee, accused President Nana Addo Dankwa Akufo-Addo’s government of deliberately mismanaging the energy sector, leaving it in a precarious state for a potential future administration under John Dramani Mahama.
“PURC based on its statement, has indicated that ECG is not abiding with the Cash Waterfall Mechanism and it is the mechanism that allows companies and entities throughout the energy sector value chain to get some revenue or payment, that has been jettisoned. As if that is not enough, the Ministry of Finance, since August 2023 has not paid up even a Cedi for power consumed by ministries, departments and agencies.
“From our rough estimates, that debt alone amounts to GH¢1.8 billion. Clearly, they are just trying to manage the system and hand over a dilapidated, ageing equipment, collapsed energy sector to President Mahama When he assumes office.”
“A lot of work awaits President Mahama when he assumes office. The energy sector debt alone, based on our rough estimate, is around $2 billion as we speak. They are misapplying the energy sector levy revenues and they are also misapplying the energy sector recovery levies,” John Jinapor added.
The World Bank Managing Director of Operations, Anna Bjerde, has advised the Ghanaian government to implement an emergency action plan to tackle the country’s energy crisis.
Bjerde emphasized the World Bank’s commitment to offering technical guidance to ensure Ghana’s energy sector supports economic resilience.
During a press conference in Accra, Bjerde highlighted that while Ghana’s energy challenges are not unique, they demand immediate attention.
Neglecting to address these issues promptly could worsen the situation and impose greater financial burdens on the state, diverting resources from other critical areas.
To address this, Bjerde stressed the importance of adopting an emergency action plan to effectively tackle the energy crisis.
“The problems that Ghana is experiencing are not unique to Ghana, but they are very serious because if they are not addressed they will get worse and worse. If not arrested and addressed with really an emergency action plan it will get worse and it will cost the state more to keep the energy sector running at a time when they need to spend money on other things.
“The World Bank is providing first of all technical advise on what needs to be done, so the metering, the billing, the collection and making sure that you have an account set up so from which all the different flows of the revenues collected flows to where it needs to go so that those who are generating the electricity are paid.”
Member of Parliament for South Dayi, Rockson-Nelson Dafeamekpor, has attributed the ongoing debt crisis in the country’s energy sector to mismanagement by the government.
He expressed concern that this mismanagement could lead to an energy crisis with Independent Power Producers (IPPs) already demanding substantial payments owed to them.
Mr. Dafeamekpor emphasized that the operations of IPPs are financially demanding, and they require timely payments to sustain their operations. The failure to settle these debts puts the viability of these power producers at risk.
“Where we are, the government has mismanaged the energy sector and running us into a crisis if we’re not careful. So I’m not surprised that the IPPs are demanding blood.
“They need these payments. If you look at the nature of their operations, the operations are very cost intensive. So they need these monies,” he said on JoyNews’ AM show on Thursday.
The politician expressed that the economy the current government inherited from the National Democratic Congress (NDC), is one that could have seen their progress doubled in the present year if they had followed the trajectory.
According to him, the blame on the Covid-19 pandemic for the economic challenges extending to the energy sector is not substantial.
This, he expressed is because, in the wake of the pandemic, the government received huge sums of “free monies” from international bodies. “So how did you expend it?” he questioned.
The IPPs are threatening to cut power supply to the Electricity Company of Ghana (ECG) should the debt owed them not be paid. Should this happen, many companies, businesses, and government institutions could cease operations.
Government owes these power producers about $1.5 billion, an amount accumulated between January 2022 and March 2023.
Meanwhile, the IPPs have said that government should at least by July 1, pay 30% of the total debt in order to avoid power outages.
Over the next five years, South Africa has been able to secure new investment commitments from investors totaling around 84 billion US dollars.
President Cyril Ramaphosa met with investors as part of the fifth South Africa Investment Conference. The Chief Executive Officer of the South African Breweries, Richard Rivett-Carnac explains that their investment pledge is expected to create forty thousand jobs in the country.
“ We are committing R5.8 billion and will invest the full amount by the end of this year. It’s primarily for the expansion of our brewery in Gqeberha. It was a project that was started last year and will be completed this year. And this is at the back of last year’s investment commitment to invest in 4 point five.,”
While President Ramaphosa has put forward his multibillion-dollar US investment target, South Africans on the street believe that he needs to focus on eradicating electricity blackouts in order to boost investor confidence.
“I feel like President Ramaphosa should be focusing on sorting out our electricity problem because in terms of business, we are losing more than we are profiting because of the extra provisions we have to make for electricity,” explains Miles Thomas, a South African citizen
Kavish Ramanand, also a South African citizen raises concerns regarding the expenditure of the funds injected by investors.
“If people are willing to invest then that’s great. The first thing they need to look at is the issue of corruption and protecting the funds. I think also load-shedding.” said Ramanand
Cebo Ngema, a South African citizen insists that President Ramaphosa’s energy investment plan will turn around the country.
“They can invest and the electricity crisis will be alright meaning they can continue with the business. Not everything is about electricity. We do have generators now to boost businesses,”
The South Africa Investment was first introduced by President Cyril Ramaphosa in 2018 to help attract more investors to the country.
Zimbabwe’s ruling Zanu-PF party has blamed the country’s severe power outages on former long-time leader Robert Mugabe.
Zimbabweans have been subjected to power outages lasting up to 18 hours per day for the past two weeks. The crisis worsened as a result of low water levels at the Kariba South power station.
According to a Zanu-PF spokesman, the country is currently dealing with the consequences of the previous administration’s “neglect” to invest in power generation over the years.
“The economic management of the last two decades of [President] Mugabe is retarding the speed of recovery; but you can’t doubt that there’s a recovery which is going on,” Chris Mutsvangwa told South African broadcaster eNCA.
The party has been in power since 1980 when the country gained independence from Britain.
The head of Ukraine’s biggest private energy firm says people should consider leaving the country to reduce demand on the country’s power network.
“If they can find an alternative place to stay for another three or four months, it will be very helpful to the system,” DTEK chief executive Maxim Timchenko told the BBC.
Russian attacks have damaged almost half of Ukraine’s energy system.
Millions of people are without power as temperatures drop for winter.
Blackouts – both scheduled and unscheduled –have become common in many parts of Ukraine, as Russia aims regular waves of missile attacks at parts of the energy infrastructure.
Earlier this week, Kremlin spokesperson Dmitry Peskov suggested that the strikes were a “consequence” of Ukraine’s refusal to negotiate with Russia.
Several Western leaders have said that targeting civilian infrastructure is a war crime.
Mr Timchenko, whose company supplies more than a quarter of Ukraine’s power, says the system becomes less reliable with each Russian attack, and reducing electricity consumption is the key to keeping it running.
The government has urged people to limit their use of domestic appliances such as ovens and washing machines.
But the damaged energy system is still unable to produce enough electricity to meet current needs, so any way of reducing usage – including leaving the country – should be seen as helping Ukraine to win the war against Russia, Mr Timchenko explained.
“If you consume less, then hospitals with injured soldiers will have guaranteed power supply. This is how it can be explained that by consuming less or leaving, they also contribute to other people.”
Russia’s attacks on infrastructure increased after a series of setbacks on the battlefield, including a major Ukrainian counter-offensive in the Kharkiv region and territorial gains in the south of the country, which eventually led to the recapture of the city of Kherson.
With temperatures in some parts of Ukraine already below freezing, there is concern that millions of people will be left without power and heating throughout the winter.
Until now, blackouts have generally been limited to a few hours, but more Russian attacks could lead to longer periods without power. Fixing the damaged infrastructure is also becoming more difficult.
“Unfortunately we have run out of equipment and spare parts… That’s why we appeal to our partners, government officials, companies and equipment producers to help us with the immediate supply of available equipment,” Mr Timchenko said.
Russia’s historical ties with Ukraine – including in developing its energy system – are also proving a problem.
“They were colleagues, now they are enemies,” Mr Timchenko said. “They bring all this knowledge to Russian military forces, educate them, make very concrete targets, know big parts of our grid or power stations.”
Despite the difficulties though, Ukrainian engineers continue to work in some of the most dangerous parts of the country, risking their lives to reconnect towns and cities to the grid.
The world’s poorest nations will bear much higher expenses as a result of being excluded from the natural gas market due to Europe’s unexpectedly rabid demand. It’s left emerging market countries unable to meet today’s needs or tomorrow’s, and the most likely consequences — factory shutdowns, more frequent and longer-lasting power shortages, the foment of social unrest — could stretch into the next decade.
“Energy security concerns in Europe are driving energy poverty in the emerging world,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Europe is sucking gas away from other countries whatever the cost.”
After a summer of rolling blackouts and political turmoil, cooler weather and heavy rains have alleviated the immediate energy crisis in Pakistan, India, Bangladesh and the Philippines. But any relief promises to be temporary. Colder temperatures are on the way — parts of South Asia can be more bitter than London — and the chances of securing long-term supplies are slim. The strong US dollar has only complicated the situation, forcing nations to choose between buying fuel or making debt payments. Under the circumstances, global fuel suppliers are increasingly wary of selling to countries that could be heading for default.
The center of the issue is Europe’s response to tightening fuel supplies and the war in Ukraine. Cut off from Russian gas, European countries have turned to the spot market, where energy that isn’t committed to buyers is made available for short-notice delivery. With prices soaring, some suppliers to South Asia have simply canceled long-scheduled deliveries in favor of better yields elsewhere, traders say.
“Suppliers don’t need to focus on securing their LNG to low affordability markets,” Raghav Mathur, an analyst at Wood Mackenzie Ltd. said. The higher prices they can get on the spot market more than make up for whatever penalties they might pay for shirking planned shipments. And that dynamic is likely to hold for years, Mathur says.
Damage caused by global warming, such as the devastating floods in Pakistan, is also wreaking economic havoc on emerging nations, prompting leaders at UN climate talks in Egypt this month to discuss how richer countries can help provide more support.
At the same time, Europe is speeding up construction of floating import terminals to bring in more fuel in the future. Germany, Italy and Finland have secured the plants. The Netherlands started importing LNG from new floating terminals in September. European demand for natural gas is expected to surge by nearly 60% through 2026, according to BloombergNEF.
Exporters in Qatar and the United States are now entertaining bids from European importers looking to buy fuel to fill the new capacity. For the first time, emerging nations like Pakistan, Bangladesh and Thailand are forced to compete on price with Germany and other economies several times their size.
“We are borrowing other people’s energy supplies,” said Vitol Group Chief Executive Officer Russell Hardy. “It’s not a great thing.”
Usually when there’s a short-term shortage, nations can sign long-term supply contracts, paying a fixed rate for the assurance of reliable deliveries for years. That hasn’t worked this time. Even bids for deliveries starting years into the future are being rejected.
India failed in its latest attempt to lock in shipments starting in 2025. Bangladesh and Thailand essentially abandoned efforts to get contracts that start before 2026, when massive new export plants in Qatar and the US plan to start shipping fuel. Pakistan last month was unable to close a six-year deal that would have started next year, after several attempts at short-term purchases also failed.
“We’d thought the crisis would be over by the end of the year, but it isn’t,” said Kulit Sombatsiri, permanent secretary of Thailand’s energy ministry, at a briefing on Monday. If LNG prices continue to rise, he added, the government would have to consider measures such as closing down convenience stores and other high-energy businesses.
LNG suppliers fear that these nations won’t be able to pay for promised deliveries. Fuel is priced in US dollars, and a single shipment currently costs nearly $100 million. For comparison, LNG shipments averaged $33 million during the 2010s. And costs are higher still in domestic currencies because the dollar has been rapidly appreciating, adding to pressure on the countries’ beleaguered finances.
Pakistan’s foreign exchange reserves dropped to the lowest level in three years last month, pushing the nation’s credit rating by Moody’s Investors Service deeper into junk. Reserves for Bangladesh, India and the Philippines are at two-year lows. In Thailand, where inflation is already at a 14-year high and reserves at a five-year low, the central bank warned that the situation will worsen if the baht doesn’t stabilize soon.
Without Russian gas flowing into Europe, the global gas markets will stay tight. Spot prices will remain high, and without the ability to secure long-term supplies, developing countries may look to dirtier fuels or other partners.
Momentum behind natural gas growth in developing economies has slowed, notably in South and Southeast Asia, putting a dent in the credentials of gas as a transition fuel, the International Energy Agency said in its World Energy Outlook 2022. Natural gas is the cleanest burning fossil fuel, and emits less CO2 than coal when combusted.
The energy shortage has already brought the emerging world and Russia closer together. Russia’s been more than happy to offer fuel to Pakistan, India and others who’ve been shut out of the spot market.
“We have established contact with the Russian side. We are, of course, very much interested in procurement of LNG,” Shafqat Ali Khan, Pakistan’s ambassador to Russia, told the state-run Tass news agency. “If the rich countries take away all the LNG, what is going to happen to us?”
While China’s LNG imports have dropped overall in part because of high spot prices, the nation has increased purchases of Russian LNG at a deep discount. Deliveries from Russia to China are up about 25% so far this year, according to ship-tracking data compiled by Bloomberg.
Poorer countries may also turn to cheaper fuels like coal and oil. Or they’ll look to develop their own domestic resources. The International Chamber of Commerce-Bangladesh urged the government to move faster with natural gas exploration both on-shore and off-shore to replace expensive LNG. Critics of Pakistan’s government are asking why they haven’t tapped gas reserves in parts of the country.
“The only saving grace will be if it doesn’t get too cold,” said Shaiq Jawed, managing director at JK Group, a Pakistan-based supplier of textiles to global hotel chains. This summer, for the first time in 25 years, the company only received half of the gas it needed, he said. If it needs to, it can rely on electricity and coal-generated power. “This is the last resort, but closing down is not an option.”
For people worried about climate change and the environment, none of those are good options. Coal and oil are much dirtier than gas. The process of extracting new fossil fuels is energy-intensive and linked to increased pollution and earthquake activity.
“If natural gas is going to be beyond our means, obviously you’re looking at reverting to coal to an extent because you need the base level of electricity to be generated,” Nirmala Sitharaman, India’s finance minister, said last month. “And that just cannot be done only through solar or wind energy.”
Renewables, like solar, could provide relief eventually. Until then, high prices will do some of the work. Emerging Asia’s gas demand growth slowed “markedly” between January and July as sky-high prices dragged down consumption, according to the IEA. Thailand, the region’s top gas user, saw a 12% drop in demand over that period as high prices squeezed power sector use and falling domestic production reduced supply.
Governments will have to do the rest, rationing fuel and scheduling blackouts when there isn’t enough energy to go around.
It will take up to four years for the market to balance, said WoodMac’s Mathur. Until then, volatile prices will be the norm and, he said, “LNG will belong first to the ‘developed,’ with the leftovers for the ‘developing.’”
Countries in South America, like Brazil and Argentina, may be slightly more insulated, given investments in hydropower. Even so, Brazil’s import bill more than doubled during the first seven months of this year to $3.7 billion, the result of surging overseas prices and delays on a domestic pipeline project. If the rainy season is late this year, Brazil may need to buy time with still more LNG imports.
“We shouldn’t forget that the part of the LNG that we get, somebody else doesn’t get,” said Gunvor Group Ltd.’s Chief Executive Officer Torbjorn Tornqvist.
Meanwhile, the Philippines and Vietnam are rethinking plans to start importing LNG. The Philippines continues to delay the start of their first import terminal, while the government in Vietnam is considering cutting capacity for planned gas-fired power plants. Those projects were designed to meet surging domestic demand. Policymakers have yet to put forward an alternative.
A Ukrainian official has asked people to donate heaters and generators to Ukraine, which is still without power as a result of Russian strikes on energy facilities.
“Best support for Ukraine today, aside from weapons, is autonomous electricity & heat sources,” said Ministry of Internal Affairs Adviser Anton Gerashchenko on Twitter.
Best support for Ukraine today, besides weapons, are autonomous electricity & heat sources
If you have a generator you don’t or rarely use – please consider gifting it to 🇺🇦. We have a difficult winter ahead but we will prevail
Please contact 🇺🇦 embassy in your country for this
“If you have a generator you don’t or rarely use – please consider gifting it to Ukraine. We have a difficult winter ahead but we will prevail.”
In recent weeks, the Kremlin has attacked Ukraine’s critical infrastructure with wave after wave of air strikes – leaving people without electricity, heat, and water.
On Monday, large parts of Kyiv were cut off from power and water supplies after Russian strikes hit critical infrastructure in the capital, Kharkiv, and other cities.
The series of attacks appeared to be an apparent retaliation for what Moscow alleged was a Ukrainian attack on its Black Sea Fleet over the weekend.
Mr Geraschenko added that those who want to donate them should contact their Ukrainian embassy.
It is hoped that the offer of cash rewards for households participating in energy-saving schemes will lessen the possibility of blackouts during the upcoming chilly winter months.
The country has been put on notice that the chances of gas shortages this winter have risen markedly, prompting a contingency plan to prioritise heating.
National Grid’s Electricity System Operator (ESO) warned that planned three-hour power blackouts could be imposed in some areas, in the “unlikely” event supplies of gas fall short of demand.
It revealed the measure in an update on the UK’s state of energy readiness for the cold months ahead but it said that the risk of temporary power cuts could be avoided with help from the public.
The report showed, under a base case scenario, that margins between peak demand and power supply were expected to be sufficient and similar to recent years thanks to secure North Sea gas supplies, and imports via Norway and by ship.
A separate study by National Grid Gas Transmission, which is a separate business to the ESO, saw the potential for the shortfall in gas supplies within continental Europe – as a result of Russia’s war in Ukraine – to impact the UK’s usual ability to attract imports.
It suggested gas needed to power the UK’s electricity grid was expected to rise by nearly 22% – offsetting savings from lower household and business use – largely because of a need for power in France where many nuclear plants are offline.
It saw LNG (liquefied natural gas) from the US and Qatar acting as the new primary source of supply flexibility.
Gas accounts for over 40% of UK power generation – more if the wind fails to blow and other plants are offline for maintenance.
The ESO’s report marked a darkening in the prospect for disruption in the months ahead following a comparatively rosy early view report in July.
There was a clear sign of a shift in direction earlier this week when it emerged that the energy regulator Ofgem had warned of a “significant risk” of a gas supply emergency.
It blamed the international scramble for supplies because of the war, which has starved continental Europe of its main source of natural gas.
A gas supply emergency can be declared when suppliers are unable to safely get gas to homes and businesses.
It could mean that some customers, starting with the largest industrial consumers, will be asked to stop using gas for a temporary period.
The aim would be to keep gas and gas-generated electricity supplies stable for households for as long as possible.
For the electricity market, coal-fired power stations can be brought back online under what is known as a system notice to help fill stopgaps. This has traditionally happened when nuclear plants go offline or the wind fails to blow.
The hope is that these sorts of measures will not be necessary because of the looming demand for flexibility services.
It is expected to be implemented at least 12 times, whatever happens, from November to March to ensure a benefit for signatories.
The ESO’s director of corporate affairs, Jake Rigg, said: “If you put your washing machine or other electrical appliances on at night instead of the peak in the early evening, you can get some money back when we all need it.”
Energy bills have rocketed this year but now come under the protection of government caps on wholesale costs, shielding both households and businesses from the worst in the price surge ahead of winter.
It means the taxpayer will foot the bill for wholesale prices above the unit cap level.
The scheme does not cap your bill, which will continue to depend on the amount of energy used.
An Ofgem spokesperson said of the National Grid reports: “We have one of the most reliable energy systems in the world and we are in a favourable position.
“However, it is incumbent on a responsible and prudent energy sector to ensure the right contingency measures are in place, which is why we are working with the government, National Grid and key partners to protect consumers, so that Great Britain is fully prepared for any challenges this winter.”
