Adopt a graduated approach to debt recovery – Government tells PURC

Government has urged the Public Utilities and Regulatory Commission (PURC) to defer at least 35% of the next electricity tariff adjustment owing to the current economic challenges faced by Ghanaians.

Ahead of the Commission’s expected quarterly adjustment of electricity tariffs, government Officials are reported to be impressing the regulator to be measured in its efforts to clear the outstanding debts owed to Power Producers.

Forex-related debts owed to power producers are reported to have increased by some ¢1.2 billion as a result of the non-application of the proposed 44% increase in tariffs in the last adjustment window.

Though the utility providers requested a 44% increase in order to clear outstanding debts, the PURC allowed only a 29% increase.

The outstanding 15% is said to have accumulated an extra debt of some ¢1.2 billion since then.

Major Independent Power Producers are reported to be threatening to switch off their plants if government does not pay up the arrears.

Sources within government say while the government is keen to avoid blackouts emanating from shutdowns, it is also wary of allowing the PURC to fully impose the needed 27.9% increase in the upcoming window to clear the extra debts.

Reports say government late Tuesday night urged the PURC to defer part of the expected increase until such a time when economic conditions improve.

Though the cost of living is gradually reducing after recent hikes, government sources say conditions should be allowed to improve some more before the full debts are cleared.

The deferment is expected to enable the Utility providers clear parts of their debts while cushioning Ghanaians for the period.

IMF Bailout

Government is seeking $3 billion from the Fund to shore up its battered economy.

On Friday, IMF Managing Director Kristalina Georgieva said Ghana’s official creditors had provided the necessary financing assurances for the IMF Executive Board to look at signing off on the loan.

Minister of State in the Finance Ministry Mohammed Amin Adam told Reuters on Sunday that the first tranche is also expected to come in next week

“We expect a deal on Wednesday. With the disbursement, there is going to be $600 million as a first tranche just immediately after the approval.”

He said a second tranche of $600 million is expected to be approved after a successful first review of the programme, sometime in November or December, with the rest disbursed in equal tranches of $360 million after semi-annual reviews.