IMF calls for tariff adjustment to spur energy sector cost recovery

The International Monetary Fund (IMF) has encouraged Ghana to implement strong reforms to engender utility service providers to recover their cost for reliable and sustainable power for households and industries. Ms Catherine Pattillo, an IMF Deputy Director and Mr Luc Eyraud, Division Chief, African Department, IMF, made this call during a press briefing in Accra. They also called for an enabling environment for private sector players to increase renewable energy use, and urged other African countries facing energy crisis to replicate same. Ms Pattillo noted that like many other African countries, Ghana's current tariff setup did not engender high cost recovery by utility service providers, hindering their operational capabilities. 'Sometimes the setup of the energy sector does not provide the utilities the ability to have cost recovery from the charges that they make in order to operate profitably and efficiently and supply energy as needed,' she said. On the part of the Fund, she said, 'we're always d iscussing with countries on how to make sure that their energy sector, which often involves a number of State enterprises are well managed to recover their cost and provide services.' Mr Eyraud emphasised the importance of recalibrating tariff systems, noting that it would help to boost cost recovery. He also called on the government to institute mechanisms that would increase the country's share of renewable energy through enhanced private sector participation. He indicated that South Africa had been one country on the continent that has been doing well in the area of renewable energy, 'by bringing in more private producers and reducing the barriers to enter into the market.' For the past few weeks, Ghana has been experiencing some erratic power outages, which has been largely attributed to financial challenges to procure fuel for some power plants to operate to full capacity. In an interview with the Ghana News Agency last week, Nana Amoasi VII, Institute for Energy Security (IES), underscored the impo rtance of resourcing the Electricity Company of Ghana (ECG) to solve the current power outages. 'We expect the Ministry of Energy to coordinate and work with the Ministry of Finance to find alternative funding sources to deal with the challenge, thus, to procure fuel to get some of the power plants online,' he said. Meanwhile, the President, Nana Addo Dankwa Akufo-Addo, during his address at the 2024 May Day celebration in Accra, expressed optimism about sustained power, indicating that some challenges in the sector had been resolved. 'Over the period, the issues surrounding transformers and gas supply have been successfully resolved, resulting in sufficient improvement in power supply reliability,' he said. Source: Ghana News Agency