The African Centre for Energy Policy (ACEP), an energy policy think tank has tasked the governing New Patriotic Party (NPP) to urgently establish a system that will regulate the petroleum companies licensing regime in the country.
According to ACEP, the government should continue the process with urgency and also develop regulations on licensing and management of public register of petroleum agreements.
The energy and governance policy think tank is of the view that, this will improve upon transparency in the management of the country’s oil and gas resource.
ACEP is further calling on the current government to take a critical look at the non-performing petroleum agreements and where some of the companies have failed to fulfill their obligations, take steps to punish them or abrogate their contracts.
‘We urge the government to consolidate the efforts of the past government in the passage of the Petroleum Exploration and Production Act, 2016 (Act 917) that seeks to sanitized the sector’.
Briefing the media on some of the challenges ACEP has discovered in the petroleum sector in relation to some of the contracts signed by the out-gone National Democratic Congress government; Benjamin Boakye, Deputy Executive Secretary of ACEP, said the licensing regime will ensure there is aggressive investment attraction drive through the application of the new petroleum Act 2016, which has set in motion the transparency process of awarding petroleum contracts through competitive bidding.
He explained that the challenges of the energy sector are many and are with alarming signals that could derail the national economy for a long time.
In the same vein, we recognized that it has the potential to transform the economy enormously. This is a double edged sword situation that requires efficient leadership to carefully align the sector”.
He noted that the power sector challenges are far from over regardless of the relative stability in supply to the consumers across the country.
He added that the additional generation capacity to the grid helped to provide power to replace unavailable power from the T3 thermal plant, Akosombo Hydro plant, Kpong Hydro plant, Asogli among others in the country.
However, the other challenges such as financial distress of the utility companies, fuel supply security, high tariff and suppressed demand do not only threaten the stability of power supply but an explosion of the economy as a whole he said.
He insisted that the utility companies continue to reel under financial distress and the recent attempts at restructuring their indebtedness with the banks has not yet translated into improved relationship between the utility companies and the banks.
‘Volta River Authority (VRA) for instance, still struggles to secure letters of credit to procure fuel for its plants, particularly in the light of huge burden on consumers through the energy sector levies to normalize the situation’ he said.
He disclosed that as a result of financial challenges, VRA has missed all the important maintenance schedules now threatening the supply of stable power in the short term.
The T1 plant will have to be shut down because of noncompliance with maintenance agreement with Ansaldo, VRA’s technical contractor because it owes the company two million Euros and also the GT2 plant will have shut down for about two months till Ansaldo returns to work he concluded