Former Energy Minister, Dr. Kwabena Donkor, has voiced his support for the new GH¢1 fuel levy, but he emphasizes that it should not be seen as a singular solution. He believes it must be accompanied by decisive actions to reduce costs, enhance efficiency, and maintain financial discipline within the energy sector.
During his appearance on the AM Show on JoyNews, Dr. Donkor remarked, “My stance on the 1 cedi fuel levy is that we, as a society, must first acknowledge the reality. We can discuss its implementation, timing, and methodology, but the truth is that even with the 3.1 billion dollar legacy debt, it is overly simplistic to think that the 1 cedi over two years will erase that debt.”
He highlighted that, in addition to addressing the legacy debt, the energy sector is still failing to meet its operating costs. “We have a significant issue that we are not addressing, and I hope the government will tackle it soon. Currently, we are under a recovery cost in the power sector. When costs are under-recovered, debt accumulates,” he stated.
He believes the levy should tackle both the legacy debt and the persistent under-recovery. “First and foremost, we need to eliminate the existing legacy debt… We find ourselves in a situation where we have the 3.1 billion legacy debt, but we are also under-recovering costs. Therefore, we need to address both issues. I am confident that the 1 cedi will contribute to both resolving the under-recovery and eliminating the legacy debt.”
To illustrate the severity of the financial issues, he provided a recent example. “Just two weeks ago, the Minister for Finance had to secure around 50 million dollars for Karpower urgently. Otherwise, they were threatening that they could not meet their loan obligations,” he disclosed.
Dr. Donkor elaborated on the risks faced by private sector power producers. “Keep in mind that project finance typically involves equity and loans. Generally, equity constitutes about 30%, while loans make up 70%.
Source: HotFmOnline.com
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