News Guide Africa

Tag: Mr Nsiah

  • Energy sector stakeholders warn of intense erratic power supply ahead

    Dumsor

     

     

    Adnan Adams Mohammed

     

    The Institute for Energy Securities says Ghana faces renewed threat of power crisis as 560MW Sunon Asogli Power Plant shuts down amid debt dispute.

     

    “In case you are experiencing a low-key dumsor, be prepared to see an extended version of the same, due to the government’s reluctance to act decisively on the root cause,” the Institute said in a statement.

     

    It noted that a new wave of potential extended intermittent power outages reminiscent of the infamous “dumsor” looms over the country following the recent shutdown of the 560 megawatts (MW) Sunon Asogli Power Plant which reliably supplies about 12-15% of the nation’s electricity.

     

    The absence of the plant from the national grid is already evident, the Institute said.

     

    Sunon Asogli, one of Ghana’s largest power producers, suspended operations two weeks ago, citing prolonged delays in payment of US$259 million, for electricity supplied.

     

    According to the owners of the plant, a significant capital injection is required to service its operational debts and resume normal production.

     

    Reports indicate that despite calls from the Ghana Grid Company Limited (GRIDCo) to restore operations and alleviate the growing pressure on the national grid, Sunon Asogli has remained steadfast, pointing at its lack of operational fund.

     

    Subsequently, Benjamin Nsiah, Executive Director of the Center for Environmental Management and Sustainable Energy (CEMSE), in a recent interview also pointed to severe financial constraints in Ghana’s energy sector as the cause of the ongoing intermittent power outages, commonly referred to as “Dumsor.”

     

    According to Mr. Nsiah, the government owes Independent Power Producers (IPPs) and State-Owned Enterprises (SOEs) a substantial $2 billion, impacting the cash flow needed for sustained energy production.

     

    He revealed that despite generating power for distribution by the Electricity Company of Ghana (ECG) and the Northern Distribution Company (NEDCo), payments have not been made, putting a strain on energy suppliers.

     

    Mr. Nsiah explained that many IPPs are now hesitant to continue operations due to inconsistent payments and the government’s lack of transparency regarding revenue sources.

     

    He warned that Ghana could face even more severe power outages in November if the situation persists.

     

    Mr. Nsiah emphasized that the nation’s energy capacity has diminished significantly, with a reported loss of 1,000 megawatts, particularly affecting peak-hour supply.

     

    He highlighted that the IPPs and SOEs lack the necessary funds to procure fuel and natural gas to power generators, further intensifying the power crisis.

     

    Additionally, Mr. Nsiah criticized ECG’s revenue collection, citing that while ECG received $15 billion worth of power supply, only $9 billion was collected as revenue.

     

    He blamed the government for failing to restructure ECG to address these inefficiencies.

     

    Mr. Nsiah concluded by expressing that IPPs have lost confidence in the government and are reluctant to sign any new Memoranda of Understanding regarding payment agreements, posing an even greater threat to the stability of Ghana’s energy supply.

     

     

  • BOST margin: expert wants fund investigated amidst reforms

     

     

    Bulk oil company limited

     

     

    Adnan Adams Mohammed

     

    Energy industry actor is calling for the investigation of the management of Bulk Oil Company Limited (BOST) for under-declaring profit in 2022.

     

    The Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE) notes that, BOST benefited from about GHC450 million from the BOST margin which alone could give the profit declared by the company for 2022.

     

    It is indicated that, BOST again benefited about US$88 million monthly from the Bank of Ghana at cheaper rates compared to market rates through the Gold for oil policy. In addition to BOST being a commercial entity runs tank services for BIDECs and trades Petroleum products locally and to neighbouring landlord countries.

     

    “Although they got cheaper dollars from the BOG to import finished products, their premiums were in most cases higher than the premiums of private Bulk importers of Petroleum products It is therefore absurd for them to declare about Ghc208 million in 2022”, Benjamin Nsiah said in a radio interview last week.

     

    The energy expert is advocating for the reallocation of the Bulk Oil Storage and Transport (BOST) margin, currently charged at 12 GHp per litre of fuel, to an infrastructure fund aimed at developing Ghana’s downstream oil sector.

     

    According to Mr Nsiah, instead of utilizing the BOST margin for the intended purpose of developing the downstream petroleum sector, BOST waits until the end of the year to declare the funds as profit.

     

    He expressed concern over this practice and called for a thorough investigation into BOST’s activities.

     

    Mr Nsiah also urged the Minister of Finance to take over the collection of the 12 GHp margin and rebrand it as an infrastructure fund, which he believes would better serve the interests of the Ghanaian people.

     

    He emphasized that the current use of the margin is not fulfilling its original purpose.

     

    “The downstream petroleum sector needs transformation, and BOST, which has the mandate to ensure this transformation, is failing to live up to its responsibilities,” Nsiah stated.

     

    He criticized BOST’s management for simply collecting the funds and presenting them as profit, rather than using them to drive sectoral improvements.

     

    Meanwhile, the Managing Director of BOST, Dr Edwin Alfred Provencal, has clarified the purpose behind the collection of the BOST Margin on petroleum products.

     

    His remarks come in response to Mr Nsiah’s suggestion that the BOST Margin might be reallocated to an infrastructure fund dedicated to the downstream oil sector.

     

    The BOST Margin, a levy imposed on petroleum products, is intended to cover the maintenance and operating costs of petroleum depots and to fund expansion projects across these facilities.

     

    In an interview with Citi Business News, Dr. Provencal reaffirmed BOST’s commitment to ensuring the continuous availability and affordability of fuel nationwide.

     

    He emphasised that the BOST Margin is essential for sustaining the country’s energy infrastructure, which ultimately benefits both consumers and the broader industry.

     

    “The BOST margin was voted for a purpose and that purpose was relevant when it was voted and it is still relevant today. BOST is mandated to put its resources in the most unprofitable areas of the country like a form of social service to assure price parity across the country so it is in the wisdom of the founders of the company and NPA to keep these assets in the remotest part of the country running.

     

    “For those who advocate for the removal of the BOST margin, I say to them: ‘If you take away the revenue for operations and maintenance, then let’s close the facility down because that service which is a social service, the cost has to be socialized,” Dr Edwin Alfred Provencal said.