Parliament approves $250 million for the Ghana Energy Sector Recovery Programme

Parliament has approved an amount of $250 million loan agreement for the Ghana Energy Sector Recovery Programme (ESRP).

The loan is to provide funding for the ESRP to support specific activities aimed at reducing the costs of electricity purchases and increasing revenue collection of the distribution utilities.

It will also be used to improve financial management system of the Electricity Company of Ghana to reduce losses as well as support the National Liquified Petroleum Promotion Programme  towards the achievement of the 50 per cent LPG access goal by 2030.

The facility is an agreement between the government of Ghana and the International Development Association of the World Bank Group.

Earlier rejection

The facility was on July 30, 2024 rejected by the House over misunderstanding that $90 million of the amount had been earmarked for consultancy.

Due to the lack of satisfactory explanation, the Speaker of Parliament, Alban Sumana Kingsford Bagbin, referred the agreement back to the Finance Committee for consideration and report to the House today.

When the motion of rescission was moved on today for the approval of the loan, requested for proper explanation on how the $90 million would be expended for consultancy.

The Finance Ministry later explained to the House that only $10 million, equivalent of GH160 million, would be allocated for consultancy.

Project components 

The project has been designed into two parts—Programme for Results (P for R) and Investment Project Financing (IPF). 

For the P for R, a total of $150 million has been earmarked for implementation, while $100 million for IPF to reduce power systems cost, improve the operational performance of the ECG, and reduce distribution.

The P for R programme has four result areas for reduced power system costs through economic dispatch, improve operational performance of the ECG, improved financial management systems and process as well as increased access to clean cooking solutions.

This, among others, will address the constrains to accelerating household, commercial caterers and school access to clean cooking solutions by providing partial funding to improve affordability of liquified petroleum gas stoves and accessories.

The programme will support the implementation of phase 1 of the National LPGPP in areas across the country where cylinder recirculation model is being rolled out and it is expected to reach 450,00 beneficiaries by giving them access to LPG cook-stove packs.

Rational for the financing 

Per the Finance Committee’s report, the committee members observed that the government had over the years been making strides in expanding access of electricity to all parts of the country through grid extension, mini-grid installations and off-grid solar solutions. 

In order to do this, it said the government implemented a number of projects including the Ghana Energy Development and Access Projects I and II which was aimed at increasing electricity access in rural and peri-urban areas, and the Ghana Energy Sector Transformation Initiative Project which sought to strengthen the capacity of the energy sector, among others.

Motion 

The Deputy Majority Whip, Habib Iddrisu, moved the motion on the floor today for the approval of the loan, and it was seconded by the Ranking Member on the Finance Committee and MP for Bolgatanga Central, Isaac Adongo.

Mr Adongo told the House the Finance Committee met and the Finance Ministry explained that the original $90 million was not for consultancy. 

He said the ministry said due to the nature of the project design, there was no project management as a component and as a result, some of those expenditures were captured as goods and services which was lumped with the supply of prepaid meters and was wrongly misunderstood as constituting $90 million for consultancy.

“We have since been provided with the information and explanation had been offered and on the basis of that we support the motion,” Mr Adongo stated.