The Director for Energy Financial Solutions, Policy and Regulation at the African Development Bank (AfDB), Wale Shonibare, has stated that Independent Power Producers are owed around $1.3 billion as of the end of January this year due to the Electricity Company of Ghana’s (ECG) inability to collect revenues effectively from electricity consumers and pay for power from producers.
Mr. Shonibare revealed this at the second regulatory conversation organized by the Public Utilities Regulatory Commission (PURC) in Accra.
The event was held under the theme “The regulator in an era of economic turbulence and the energy transition: Lessons from the past and a guide for the future.”
He emphasized the need for effective regulations to help utilities overcome the challenges of the ongoing global economic shocks and the energy transition process, especially in the power industry, where revenue collection or revenue losses and rising energy sector debt are common issues.
Mr. Shonibare recommended that the PURC, in its oversight roles over firms in the power generation, electricity distribution and transmission value chains, as well as water utilities, should pursue far-sighted and effective regulations that promote business sustainability.
He stated that strong and prudent regulations could lay sound foundations for players within the sector to be competitive, agile, and profitable, while championing the building of resilience in the sector to withstand economic shocks.
He also stressed the need for strong regulatory support to ensure a smooth energy transition, especially during the COVID-19 pandemic and associated economic challenges.
Mr Shonibare called for country-specific policy and regulatory interventions to achieve a just and equitable energy transition in Ghana and the African continent, urging countries to identify optimal pathways and reflect this in their energy transition plans, rather than adopting a one-model-fit-for-all approach.
Regarding tariffs, he urged the PURC to ensure efficiency and innovation without discouraging the adoption of new business models and technologies.
To improve the regulatory governance framework of the PURC, he recommended amending the Public Utilities Regulatory Act 1997 (Act 538) to prevent Commissioners or Executive Secretaries from being appointed and to reduce the level of financial influence from the government on regulators.
Mr. Shonibare also suggested establishing an independent governance structure for the regulatory authority in the sector, rather than attaching them to energy ministries.
Source: Graphiconline.
