Following its ‘surprised’ rejection by Members of Parliament (MPs) on the 30th of July this year, Parliament of Ghana has now approved a facility from the International Development Association (IDA) of the World Bank Group to finance the Ghana Energy Sector Recovery Programme. The facility, a loan amounting to US$250 million is to be used to support specific activities aimed at reducing costs of electricity purchases; increasing revenue collection of the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo), and improving the financial management system of ECG as well as support the National LPG Promotion Programme.
On Tuesday, July 30, 2024, the House by voice vote rejected the loan after an MP raised concern about how much was going to be spent on consultancy under the project. According to Alhaji Mohammed Mubarak Muntaka (MP, Asawase) who noted the discrepancy in amount allocated during a debate, an amount of $90 million was being allocated for consultancy which didn’t sit well with him. However, the House was recalled from recess on September 3rd and 4th for an extraordinary meeting to reconsider the decision taken regarding the loan on July 30 where the debate of the $90 million for consultancy was reopened. The Speaker of Parliament, Rt Hon Alban Sumana Kingsford Bagbin, referred the issue back to the Committee on Finance for further consideration. The committee returned the following day with information that the $90 million was a bulk figure for ‘goods and services’ which was misconstrued as consultancy fee.
According to the Finance Committee, the proposed programme amounts to $260 million in total out of which $250 million would be sourced from the IDA facility and $10 million is a grant. The Ghana Energy Sector Recovery Programme forms part of efforts by the government to address disparity in electricity access particularly in rural and underserved areas of the country.
The programme is in 2 parts namely; Programme for Results (P for R) and Investment Project Financing (IPF). Among other things, the P for R component will seek to support ECG to reduce commercial losses and increase collection in an efficient manner by procuring and installing smart prepaid meters and upgrading the ICT backend. Again, the programme is expected to support ECG to generate energy accounting reports starting with regions and further refining them to districts to allow the company run targeted revenue protection programmes.
Under the terms and conditions of the loan, the $250 million will be financed with a $110 million from IDA Performance Based Allocation (PBA) and $140 million from the IDA Scale-up Window Shorter Maturity Loans (SUW-SML), with Grace Period and the Repayment Period for SUW-SML being 6 years each at a minimum commitment charge of 0.5 (half of 1% per annum on the unwithdrawn financing balance).