PDS fiasco: Expert outlines solution to managing power sector revenue collection
As part of an immediate
short-term and long-term measure to manage the revenue collections of the power
sector (electricity) sells, a financial and energy expert has outline solutions
in the wake of Power Distribution Service/Electricity Company of Ghana
(PDS/ECG) fiasco.
There is an urgent the
need to setup a trustee to manage the power sector revenue collection account
as well as the institution of a Cash Waterfall Mechanism (CWM) to help manage the
growing and devastating energy sector which is putting the power sector in
danger, Finance and energy expert and former Executive Director of the Standard
Chartered Bank, Mr. Alex Mould has called on the government.
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. CWM 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 government or any institution that collects the revenue on
behalf of the service providers.
“There seems to be
some reluctance by the Finance Minister to setup 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”, Mr. Mould in an interview
alleged.
The current ways of
revenue collection and distribution mechanism in the power sector, according to
him, is flawed with deliberate delays which caused unnecessary float interest
revenue for the collecting company (then ECG and now PDS).
This 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
cash (liquidity), he alleged.
The former Chief
Executive of the Ghana National Petroleum Corporation (GNPC) further stated
that, 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.”
He claimed that, the
main interest of the 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, GRIDCo, the Independent Power Producers and
the Fuel Suppliers i.e Ghana Gas, GNPC and NGas.”
He added 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.”
According to Mr. Mould
that 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.
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