The 2024 semi-annual report of the Public Interests and Accountability Committee has revealed that the Ghana National Gas Limited Company (GNGLC) received a total Cash Waterfall Mechanism (CWM)/Natural Gas Clearing House (NGCH) revenue totalling US$10,173,638.56 towards invoices for 2024.
This revenue represents payments for Lean Gas sales, covering invoices dated between November 2023 and April 2024, owing to the two-month lag in payments processed through the CWM/NGCH.
Additionally, the report highlights that the Ghana National Petroleum Corporation (GNPC) received a substantial $25,200,000.00 from the Cash Waterfall Mechanism/Natural Gas Clearing House over the same period.
These figures underscore the critical role of the Cash Waterfall Mechanism in ensuring timely disbursement of revenues to key stakeholders in Ghana’s natural gas sector.
The Cash Waterfall Mechanism was implemented in April 2020 as part of the Energy Sector Recovery Programme (ESRP) to ensure fairness and transparency in distributing energy revenues among electricity distribution companies.
The implementation of the revised CWM involves fixed payments to Level A comprising the Independent Power Producers (IPPs) and varying payments to Level B comprising the State-Owned Enterprises, Regulators and the embedded generators.
The Electricity Company of Ghana pays Independent Power Producers (IPPs) and State-Owned Enterprises (SOEs) in Ghanaian cedis. When there is a shortfall to be covered by the Ministry of Finance, the Bank of Ghana steps in to provide foreign currency for paying the IPP bills. This helps avoid delays in payments. State-owned enterprises also get their balances settled in Ghanaian cedis.
Already, the Public Utilities Regulatory Commission (PURC) has issued an urgent call for a revision of the Cash Waterfall Mechanism (CWM) to avert a looming financial crisis in Ghana’s energy sector.
The PURC’s concerns focus on key energy sector players such as the Ghana Grid Company (GRIDCo), Volta River Authority (VRA), Bui Power Authority, and independent power producers. These entities are struggling financially, primarily because the current CWM framework, revised in August 2023, is not functioning as intended. The mechanism, which requires the Electricity Company of Ghana (ECG) to collect and distribute a minimum of GHȼ1 billion monthly, has fallen short, with ECG failing to comply with the guidelines.
Meanwhile, the report also disclosed that the Ministry of Energy, following the launch of the National Energy Transition Framework and Investment Plan, a National Energy Transition Secretariat has been set up at the Office of the President to oversee the implementation of the Framework.
Subsequently, a process has commenced to secure a one-million euro grant from the United
Nations Office for Project Services (UNOPS) for a grid feasibility study to increase the uptakeof clean energy.
By Eugene Davis
