The Volta River Authority (VRA) has raised concerns over Independent Power Producers’ (IPPs) demands for increased monthly payments under the Cash Waterfall Mechanism (CWM), from $45 million to $59 million. This request, if approved by the government, would significantly impact the financial stability of not only the VRA but also GRIDCo and the Bui Power Authority.
The Public Utilities Regulatory Commission (PURC) has initiated a review of the CWM to address payment allocation challenges. Jerry Nelson Nettey, National Treasurer of the VRA Senior Staff Association, expressed concerns about the potential negative impact on public power entities if these issues remain unresolved.
Nettey highlighted the mismanagement of the CWM, citing letters proposing the $45 million increase to $59.5 million, equivalent to approximately 960 million Ghana cedis. This amount exceeds the Electricity Company of Ghana’s (ECG) monthly collections.
The VRA struggles to stay afloat, with NEDCo’s power supply from Brong Ahafo to northern regions providing relief through liquidity. President Akufo-Addo has requested reduced power exports, but some IPPs show interest in exporting power, prompting questions about their priorities.
Nettey queried the IPPs’ intentions, stating they were established to support Ghana’s energy sector, not export power to other countries.
The Cash Waterfall Mechanism’s purpose is to allocate payments to stakeholders, including IPPs and state-owned enterprises (SOEs). However, the VRA Senior Staff Association has expressed dissatisfaction with the updated CWM’s impact on public power entities.
The association argues that the CWM primarily benefits IPPs, while public entities face financial struggles.
ECG owes IPPs approximately $1.4 billion, with some IPPs facing repayment difficulties and penalty defaults.
The PURC’s review aims to address these challenges and ensure fair payment allocations.
VRA’s concerns highlight the need for a balanced approach to Ghana’s energy sector, ensuring public power entities’ financial stability and promoting accountability in the Cash Waterfall Mechanism.
