Finance Minister, Dr Mohammed Amin Adam has warned that any deviation from implementing the revised Cash Waterfall Mechanism could make the energy sector crisis even worse.

The revised mechanism is designed to ensure fair and equitable allocation of revenues accruing from electricity tariffs approved by the Public Utilities Regulatory Commission.

The Electricity Company of Ghana must distribute the tariff revenues it collects among all sector players along the electricity value chain.

According to the latest audit report by the Price Water House Coopers, the ECG has not been paying to some of the players.

Speaking to JoyNews, the Finance Minister stated that failure to adhere to the terms of the Cash Waterfall Mechanism is only adding to the debt in the energy sector.

“The energy sector continues to be a bother for us because the arrears as we know of today are still huge on our books.

“However, we’ve seen significant progress in addressing them, not just the arrears but also in preventing the accumulation of arrears going forward.

“The updated energy sector recovery program is intended to achieve that,” he said on March 27, 2024.

Dr Amin stated that there is a revised cash waterfall mechanism that guarantees payment to Independent Power Producers (IPPs) and state-owned enterprises with the Ministry Of Finance supporting where there are shortfalls.

“Therefore, we are very confident that the effective implementation of the cash waterfall mechanism will help in preventing accumulation in new arrears,” he said.

According to the Finance Minister, government has entered into a debt restructuring agreement with the Independent Power Producers to spread the payment within 5 years.

“We are almost through with our negotiation with the IPPs to restructure the arrears over several years. As I speak to you I believe in the next two or three weeks we will be signing those agreements with the IPPs we have concluded negotiation with.”

“We have even started showing our good faith to the IPPs by making some payment that we have agreed to do with them and this is why you do not hear the threats that you used to hear and read about from IPPs threatening to shut down and so we are very confident that the signing of this agreement will pave way for spreading the arrears over several years.

“An average over five years to provide some relief for us to put our house to ensure that we do not go back to the days of huge arrears in the energy sector,” he said.

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