Thank you very much, Mr Speaker, for the opportunity to contribute to the Motion. In doing this, my reference would be on page 150, paragraphs 813 and 814 of the Budget Statement.
Essentially, this is a portion that the Hon Minister for Finance seeks to tell us how they intend addressing the financial challenges confronting the energy sector. It is true that the energy sector is confronted with serious financial threats, notwithstanding the
fact that the previous Government introduced the Energy Sector Levy and bequeathed same to the current Government, a source of revenue that continued to baffle people in terms of the quantum we rake in every year.
Mr Speaker, as of January, 2019, the Energy Sector Recovery Programme, that was referred to by the Hon Minister for Finance on page 150, indicates that the net arrears in the Energy Sector was US$12.74 billion. Out of this, US$850 million is owed to the private sector. The document goes further to indicate that if nothing is done, by the close of this year, we would have an additional US$1.268 billion.
Today, my presentation is to demonstrate that contrary to the narrative given by Government, which is as a result of excess capacity, I would want to point out arrears that have accumulated these particular debts. However, I do know very clearly that my Hon Colleagues had already dealt with the issue of the excess capacity; but let us just do simple mathematics.
Now, we have agreed that this is a document that was provided by ECG. We agreed that the peak demand is 2,745 MW and the available capacity is 3,420 MW. Mr Speaker, if we take the peak out of the dependable
capacity, we have a difference of 679 MW. For any power system, you need a redundancy, and the technical people would tell you that you need, at least, 20 per cent of your peak demand. If that is the case, if we were to do simple mathematics, it would give us 549 MW. If this is taken from the so-called excess capacity, we would now have in our possession a difference of roughly 30 MW.
When we ask them a very simple question of where this excess capacity is coming from, they have no answer. That is why we realised that in three different documents, the Ministry of Energy, Ministry of Finance and ECG quoted different figures for the same excess capacity cost. I think today's debate, prior to mine, has settled this issue.
However, what is more interesting is that, there are other four areas that have cost this country, resulting in the net arrears we have in the Energy Sector. One has to do with the financial loss of US$190 billion as a result of the PDS saga which I would debate later. Another has to do with the indebtedness of Ministries, Departments and Agencies to ECG and the other one has to do with the delay in the Takoradi-Tema inter- connection pipe.
Mr Speaker, last but not least, the fact is that we went ahead, even in the face of gas glut, to sign other additional LPG supply agreements on a take-or-pay basis.
Mr Speaker, you would recalled that on the various documents that we have had, on an annual basis, ECG's technical and commercial losses were about 23 per cent. In monetary terms, it is US$400 million annually. It is because of this that the previous Government decided to opt for the Millennium Challenge Corporation Compact II Agreement. This was an Agreement that was supposed to rake in US$490 million into the energy sector, particularly the downstream.
Mr Speaker, US$300 million has already been injected into this system. There was a remainder of US$190 million that was supposed to address the technical challenges of ECG, and that would have reduced this 23 per cent losses that we experienced which gives us US$400 million in terms of losses every year.
Mr Speaker, it is no longer news that this is an Agreement that has been abrogated. The very reason this was done was because of a very simple procurement process that was supposed to transition ECG to PDS.