Ghana aims to reduces power bill as it restructures costly power contracts
- Plans are in place to restructure Ghana's energy contracts which have been deemed to be overly expensive
- The current power plan compels Ghana to pay power producers for energy given even if it is not consumed
- Ghana currently pays about $500 million annually for power it does not consume
Our Manifesto: This is what YEN.com.gh believes in
Ghana has initiated a process of restructuring expensive energy contracts as it seeks to reduce costs in that sector.
In that respect, it is considering a plan to buy out debts of independent power producers in a bid to reduce its power bill.
Ghana, regarded as West Africa’s second biggest economy, pays about $500 million every year for power it does not consume.
READ ALSO: Apple to release high-end headsets in 2020; details emerge online
Per a Bloomberg report, talks are underway to ensure that the practice is halted as soon as possible.
YEN.com.gh understands that such deals, in which the government pays for power whether or not supplies were needed, have left the country with almost double the generation capacity it requires to meet peak demand of 2,700 megawatts.
Information available shows that the government intends to take over loans of companies from financial institutions.
This would be done through the state-owned Ghana Infrastructure Investment Fund at less challenging repayment terms.
The government has also opened talks with multilateral lenders such as the African Development Bank and International Finance Corp. to join as investors.
It has been estimated that a cheaper source of finance would reduce producers’ costs.
In exchange, the government would demand would require that it only pays for powers it needs.
Eventually, the plan would give Ghana the opportunity to retain its generation capacity and save on expenses incurred on infrastructure.
In other news, the Bank of Ghana has announced the creation of an Enterprise Credit Scheme to provide support to Small and Medium Enterprises (SMEs).
READ ALSO: Oil prices drop as global spread of coronavirus sparks fears
The package is particularly for SMEs in the agricultural value chain, the Second Deputy Governor of the central bank, Elsie Addo Awadzi, said. This comes in the wake of challenges related to accessing credit by small businesses.
Awadzi noted that the plan is spearheaded by the Ghana Incentive-based Risk System for Agricultural Lending (GIRSAL) and assistance by the National Banking College (NBC).
An amount of GHC 2 billion has been projected to implement the initiative, which will be accumulated from 2.0% of the primary reserve kept by the banks.
Per a report by citibusinessnews.com, the plan is to give training to banks and related financial institutions with the requisite practical knowledge and skills.
This is intended to enable them increase access to finances to agriculture and agribusiness organizations.
The training programme is also intended to help the capacities of staff of the beneficiary institutions. This would help them appraise in an appropriate way the agricultural projects that need funding to reduce the issue of loans that don’t perform.
In other news, a Kenya-based B2B e-commerce startup, Sokowatch, is set to revolutionize the African supply-chain industry with a focus on informal retailers.
READ ALSO: Sim Shagaya: Techpreneur launches startup to fix challenges in educational sector
Read the best news on Ghana #1 news app. Install our latest app for Android and read the best news about Ghana
"I don't believe there is a president in Ghana" - Frustrated taxi driver speaks | #Yencomgh
Want to be featured on YEN.com.gh? Send us a message on our Facebook page or on Instagram with your stories, photos or videos
Source: YEN.com.gh
