The Co-chair of the Ghana Extractive Industry Transparency Initiative, Dr Steve Manteaw, has raised concerns about the exclusion of roughly 50% of ECG’s revenue from the Cash Waterfall Mechanism (CWM).
In his October 21 interview on Joy News’ PM Express, he emphasised the potential credibility issues this exclusion creates for the energy sector’s financial recovery considering that it was designed to ensure fair distribution of funds to sector players.
“It surprises me that despite the substantial jump in revenue, about 50% of the funds generated are kept outside the CWM,” Dr. Manteaw told host Evans Mensah on Monday.
The CWM was introduced as a financial innovation to manage the sector’s liquidity, ensuring that all stakeholders received their share of the revenue.
However, Manteaw believes its current implementation falls short of resolving the industry’s financial challenges.
“The mechanism isn’t a full solution, but it helps cushion everyone a little bit, allowing us to keep going,” he said.
The decision to keep a significant portion of ECG’s revenue outside the CWM stems from the company’s desire to cover operational costs before channelling funds into the system.
“ECG has made it clear that they need to meet their operational expenses first, but this hasn’t been fully acknowledged by policymakers,” Dr Manteaw said, comparing ECG’s current situation to the Ghana National Petroleum Corporation’s (GNPC) long-standing plea for revenue recognition.
ECG’s strategy has not gone unnoticed.
“The Public Utilities Regulatory Commission (PURC) even pointed out that ECG had opened several bank accounts to stash away funds, deliberately keeping them out of the CWM,” Dr Manteaw noted.
He called for better engagement with ECG to address their concerns, stating, “We need to investigate and engage ECG to accommodate their needs. If they put all their revenue into the CWM, they claim they won’t have enough to fund their operations.”
The exclusion of 50% of the revenue also raises doubts about the private sector’s contribution to resolving the sector’s debt crisis.
“It creates a credibility problem for the entity tasked with revenue assurance,” Dr Manteaw said, stressing the need for transparency in evaluating the private company’s role.
On his part, Dr Nii Darko Asante, the former Board member of the Public Utilities and Regulatory Commission (PURC), placed the blame for the failure of the Cash Waterfall Mechanism squarely on the Electricity Company of Ghana.
