ACEP questions PURC's decision to guarantee credit facilities for VRA

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December 15, 2015 10:37 AM

" It is not the job of the PURC to guarantee credit for utility providers. That is the job of the shareholders of these utility providers. Government is the biggest shareholder and ironically the biggest creditor to the utility companies."

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The Africa Centre for Energy Policy is kicking against the new arrangement made by the Public Utilities Regulatory Commission to guarantee the outstanding debts owed to banks by utility providers.

Pulse Business reported Monday that the arrangement will see the PURC acting as a guarantor in order to facilitate the acquisition of credit for the running of the country's thermal plants and other activities integral to energy provision in the country.

Banks have recently refused to grant the Volta River Authority letters of credit for the purchase of crude oil for the operation of the Tema Thermal Plants.

This new arrangement with the PURC will lend some credibility to the energy providers in the acquisition of credit, since the PURC will be responsible for ensuring that the monies are paid back. The Commission will do this by supervising an onward transfer of revenue from the utility providers to the banks.

Meanwhile, Financial Consultant, Nana Safo has criticised the action by the PURC saying " It is not the job of the PURC to guarantee credit for utility providers. That is the job of the shareholders of these utility providers. Government is the biggest shareholder and ironically the biggest creditor to the utility companies."

However, head of operations at ACEP, Benjamin Boakye believes Ghanaians will be the ones to suffer for the arrangement.

" The average Ghanaian will still be the sufferer for this arrangement. What it means is that we are going to pay all over again for the utilities we have already paid. To explain, all bills we pay are supposed to have a component that services these loans. So the basic question is, what happened to these monies."

Ben Boakye believes, though there is a need for some kind of arrangement in dealing with the financial crisis in the energy sector it is not the job of the PURC.

" All the arrangements that need to be made have been made in the cost build- up of the tariffs consumers pay. We do not need another company to deal with it."

The VRA had to shut down its Tema Plant because it couldn't afford the 1.3 billion dollars needed to keep the plant operational.

The company had borrowed 1.3 billion dollars from banks so far to power the plant. But banks have now refused to grant the Authority letters of credit to finance the purchase of crude oil.

In light of this, and many of such situations arising from the debts owed by the utility providers, the PURC has agreed to act as mediators on behalf of the energy providers in raising the necessary funds to run.

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