The government has announced plans to release audit findings of the cash waterfall mechanism to improve transparency and accountability within the nation’s energy sector.
This decision comes against the backdrop of significant financial challenges in the sector, including a sizable debt burden owed to independent power producers totalling over one billion dollars.
In July 2017, the government introduced the cash waterfall mechanism to tackle the mounting debt, to streamline revenue collection and distribution.
Nevertheless, the effectiveness of the mechanism has been constrained, highlighting the necessity for enhanced transparency and the resolution of implementation hurdles.
Speaking at the 2024 World Bank and IMF Spring meetings, Finance Minister Mohammed Amin Adam underscored the significance of the cash waterfall mechanism, affirming that audit findings would be made public to uphold transparency.
“The cash waterfall mechanism is important because at least it ensures that there’s cash flow, every player in the value chain has some cash flow so that they can be able to meet their operational cost but it’s important to also state that we’ve had challenges implementing the cash waterfall mechanism as a result of which through collaboration with the World Bank, with the IMF, we have instituted some measures to make it effective,” he explained.
Mr Amin further explained that one of the measures the government have introduced is to audit the cash waterfall mechanism quarterly but “we have also been required to publish the audit findings.”
Energy analyst Dr Yussif Sulemana supports this initiative, expressing confidence that it will aid in addressing fiscal challenges within the sector by fostering transparency.
“I think it’s a step in the right direction for transparency. So if you notice the problem that we have, some of them are induced and that has made it multifaceted and that has made it difficult to disengage which you need to tackle, which you need to prioritise,” he said.
