The power sub-sector in 2021 and beyond will need critical attention and resources, including huge capital investments to save it from collapse, a report by the Institute For Energy Policies and Research (INSTEPR) has noted.
The report by the institute noted that if efforts are not put in place to resolve the issues they have raised, the indebtedness within the power sector could reach $12.52 billion by 2023 which would be about 18.7 per cent of the country’s current Gross Domestic Product (GDP).
Dubbed the 2021 Outlook and Expectations in the Energy Sector it said: “The Independent Power Producers (IPPs) have an unpaid invoice of up to $1.44 billion as of September 2020, according to CIPDiB. This debt keeps growing though the Cash Waterfall Mechanism has been implemented since April 2020.
“The total revenue collected by ECG from consumers is not enough to meet the invoices from various stakeholders in the value chain. This is mostly to do with the technical and commercial losses experiences in Transmission and Distribution,” the report added.
The report further observed that there were transmission losses of 4.7 per cent this year, which was 1.8 per cent higher than the projected losses of 2.7 per cent.
Also, distribution losses have also increased to 26.63 per cent as against the regulatory benchmark of 23.2 per cent, according to the report.
It went on to state that the government would need to give a clear indication on how the new policy of ‘TAKE AND PAY’ would be implemented for the existing Power Purchase Agreements (PPA) which had ‘TAKE OR PAY’.
“Since the Minister of Finance made the announcement on the floor of Parliament that all TAKE OR PAY agreements will be converted to TAKE AND PAY, nothing to that effect has happened. This has created uncertainty for investors in the power sector,” the report said.
It suggested that there was an urgent need to produce more clean energy in line with the Paris Climate Agreement and the Sustainable Development Goal (SDG) 7.
“The renewable energy can serve small to medium communities through embedded generation. Other renewable energy such as Wind, Waste to Energy and Mini-Hydro Dams should be supported by the government in the coming year,” it said.