Ghana secures $260M World Bank deal to tackle Energy sector losses

Accra, Ghana - October 27, 2024 - In a significant move to tackle the $1.2 billion energy sector losses, Ghana has secured a $260 million deal with the World Bank. The agreement, part of the Energy Sector Recovery Programme, aims to boost efficiency and financial viability in the sector ¹.

The deal comprises two key components: a $250 million credit metering procurement package and a $10 million clean cooking grant. The World Bank will facilitate the procurement of one million meters through competitive bidding, with an initial 20% financing requirement for the clean cooking component.

Key targets of the agreement include:

- Cost-Efficient Energy Generation: Transmitting energy in the most cost-effective way
- Transparent Cash Waterfall Mechanism: Ensuring transparency in revenue collection
- Reduced Losses: Minimizing losses in ECG revenue collection
- Metering Gap Reduction: Drastically reducing the country's metering gap
- Improved Billing System: Integrating new meters into the billing system to reduce commercial losses

Finance Minister Dr. Mohammed Amin Adam emphasized the government's commitment to ensuring efficiency and financial viability in the energy sector.

“The cash waterfall mechanism must be adhered to… and we won’t compromise. Through this project we have an opportunity to build a robust energy infrastructure that will remain the backbone of a thriving economy. Ultimately, our objective is not to only stabilise our energy sector but also enhance the quality of life for our citizens,'' he stated.

The World Bank's Country Director, Dr. Robert Taliercio O'Brien, expressed concern over the $1.2 billion shortfalls in the sector, highlighting the need for compliance with the agreement's objectives.

Mr Asjish Khanna, Protective Manager, West and Central Africa Energy, World Bank, on his stated that the financing arrangement under the agreement would provide better results because it was tied to performance.

“This is better because rather than releasing money not achieving the results, this format of financing ensures that money is disbursed only after the achievement of results,” he said.

“We are asking ECG’s financial accounts audited to be disclosed annually at a particular time every year, once they disclose it in year one, a certain money would be,” he stated.

“Similarly, everyone believes that ECG collection and losses are not optimal, so they have a target for reducing the losses, depending on how much losses are reduced every year, again, a certain portion of money is released,” he added.

Source: Lead News Online