President-elect, John Dramani Mahama is taking over a country with many challenges ahead, especially in the energy sector, which could undermine the expectations of the people, Executive Director of the Africa Centre for Energy Policy (ACEP) Mr Ben Boakye, has said.
He states that the sector has been systematically decimated, enriching a few while the public bears the burden through the budget, levies, and high margins.
Just to give you a sense of the gravity, he said, the annual revenue from the oil sector is insufficient to cover the annual under-recoveries in the power sector.
This is despite the public paying approximately GHS 3 billion annually in levies and margins. In essence, the people are paying to plug holes that are leaking into the pockets of the revenue collectors.
In a statement, Mr Boakye said “When you take office on January 7th, you will inherit an energy sector burdened by a overall waste of over GHS 50 billion a year.”
He further stated that “I extend my heartfelt congratulations to you on your victory and the unprecedented confidence shown in you by the people of Ghana over the weekend. I wish you all the best and pray that Ghanaians will never regret this overwhelming endorsement.
“You are likely aware of the many challenges ahead, especially in the energy sector, which could undermine the expectations of the people. Over the past eight years, I have advocated for sound policies to ensure the energy sector plays a pivotal role in economic development i.e., providing industries and the public with affordable and stable power without the public funding waste, and an oil sector that optimizes the last phase of the global transition to sustainable energy.”
Below is his full statement…
Congratulations to His Excellency John Mahama
You are likely aware of the many challenges ahead, especially in the energy sector, which could undermine the expectations of the people. Over the past eight years, I have advocated for sound policies to ensure the energy sector plays a pivotal role in economic development i.e., providing industries and the public with affordable and stable power without the public funding waste, and an oil sector that optimizes the last phase of the global transition to sustainable energy. Unfortunately, like many others alarmed by the misgovernance of the sector, I was unable to influence meaningful change – I failed.
When you take office on January 7th, you will inherit an energy sector burdened by a overall waste of over GHS 50 billion a year. Here’s how this manifests:
- Bloated Agencies: The energy sector is riddled with agencies and companies that are 4-5 times larger than what was needed to perform the same work eight years ago. Numerous unnecessary management-level positions have been created, all to accommodate political appointees at the people’s expense. For example, there are redundant directorates like one for finance and another for accounting, or a directorate for engineering and one for technical and maintenance—bureaucratic layers that yield zero results. Some new institutions have even been created for tasks that could be handled by a desk officer in another agency.
- ECG Losses: In 2014, when you attempted to introduce private sector participation in ECG, the company was in much better shape than it is today. Politicians have mismanaged it to the point where it has become the single largest dependant of the national budget, posing significant risk to the entire economy and the upstream oil and gas sector. Gas payments are not guaranteed, and investors are increasingly concerned about the future of gas discoveries in Ghana. The country can no longer afford to tolerate this level of misgovernance in the power sector, particularly the two hotspots in ECG; procurement abuse and exchange rate manipulation.
- Downstream Waste: My office will soon release a report detailing the waste in the downstream petroleum sector, which burdens the people with inflated margins to sustain political interests. You have an opportunity to convert over GHS6 billion “black tax” on the people to critical resources needed to fix development challenges. You have to fix TOR, NPA, and BOST. Also, the Revenue assurance gigs by GRA serves no purpose and provides an additional source of revenue loss to the state.
- Upstream Sector: The situation in the upstream sector may sound dramatic, but we are witnessing its decline unfold before our eyes. Fortunately, this decline can be reversed with swift, decisive action to restore investor confidence by rolling back politically motivated impositions. By taking the right steps, we can attract a minimum of $2 billion in investments by 2025, out of a potential $6 billion over the medium term.
This message is not meant to be lengthy, but to emphasize that you would not have the luxury of a “honeymoon” in this situation. We will continue to generate policy ideas in the public domain, and I hope they are received in good faith to support your success. The energy situation demands a careful, surgical examination to ensure you hit the ground running on January 7th. At the very least, before the transition team concludes its work, the Ghanaian people should know exactly how much debt is outstanding in the energy sector.
Best wishes as you take on this critical challenge.
Sincerely,
[Benjamin Boakye]
