Energy Minister-designate John Jinapor has assured that the new government is committed to preventing disruptions in the power sector, despite threats from power producer Karpower and upstream Jubilee partners, including Tullow and ENI, to cut back operations. This follows a series of critical meetings with these stakeholders.
Earlier this month, Mr. Jinapor warned of a looming energy crisis due to insufficient fuel stock for power generation. Appearing before Parliament’s Appointments Committee during his vetting, he detailed the immediate steps being taken to stabilize the sector.
Appearing before Parliament’s Appointments Committee during his vetting, Energy Minister-designate John Jinapor outlined immediate steps to bridge the country’s energy supply gap and tackle the mounting challenges in the sector.
Boosting Gas Supply
“Our immediate objective is to bridge the gap. We have met with Jubilee partners, Tullow, and Ghana Gas. Ghana Gas is currently producing 100mmscf, and with reconditioning, we are confident they can increase output by an additional 35mmscf. This would provide a much-needed buffer,” Mr. Jinapor stated.
He added that securing backup liquid fuel would also stabilize power generation.
Addressing Financial Pressures:
The minister-designate acknowledged significant debts owed to key stakeholders: Karpower: $377 million, Tullow: over $100 million, ENI: additional undisclosed amounts.
“Karpower has threatened to shut down, and Tullow and ENI are considering scaling back operations. Resolving these financial challenges is critical. Once we address these issues, we should be able to stabilize the situation,” he said.
Fuel Supply Deficit
Mr. Jinapor disclosed that the energy sector faces a gas supply shortfall of 40–60mmscf even after utilizing gas from ENI, Jubilee, TEN, and NGAS. As a result, the country has had to depend on light crude oil, heavy fuel oil, and heavy distillate fuel oil to meet energy demands.
Rising Energy Sector Debt:
The total energy sector debt has reached $3 billion, attributed primarily to uncollected power sales.
“Unaccounted power sales have significantly driven up the debt,” Mr. Jinapor explained.
He further noted that the Ministry of Finance spent $28 billion on energy-related payments last year, underscoring the need to improve efficiency and ensure consumers pay for what they use.
Negotiations with Suppliers
The minister-designate revealed he is leading a team to engage Litasco, a supplier of heavy fuel oil to the country from 2017 to 2021. He highlighted that $270 million remains unpaid for fuel and guarantees from that period.
Debunking misconceptions about debt sources:
Mr. Jinapor clarified that the debt is not primarily due to “take-or-pay” agreements but rather to power that was produced, consumed, and left unpaid.
“If fuel is consumed, it means the plant is running, and capacity charges may contribute to the debt. However, the bulk of the debt stems from power sold without corresponding revenue collection,” he said.
Revenue collection concerns
The minister-designate criticized claims that the Aggregate Technical Collection and Commercial Loss (ATCNC) rate had risen from 22% to 40%.
“When we left office, ATCNC was at 22%. The claim that it has ballooned to 40% is false. However, this discrepancy underscores that unaccounted-for sales—amounting to 40 GHC for every 100 GHC sold—are a significant factor in the sector’s debt accumulation,” he added.
Mr. Jinapor emphasized the need for immediate action to address these issues and ensure a sustainable and efficient energy sector.
By Eugene Davis
