Government to negotiate for GHS 1.5bn reduction in energy sector debt – Finance Minister
Government, has announced plans to further reduce debts in the energy sector by some GHS 1.5bn.
This follows a $600m dollar cancellation of energy debts and arrears owed by government by the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDiB) last year.
The anticipated reduction in energy sector debts translates into a 20% cut in total debts owed Independent Power Producers (IPPs) in the country.
Making the assertion during a press briefing on Thursday, March 24, 2002, the Finance Minister Ken Ofori-Atta, noted the GHs 1.5bn reduction in debts will be achieved through government renegotiations with IPPs on electricity production charges.
The decision to renegotiate electricity production charges with IPPs forms part of expenditure cutting measures put in place to by government to address the current economic crisis facing the country.
It is also to ensure that the government attains its 7.4% fiscal deficit target for this year – 2022.
The Finance Minister during the press briefing noted that effective April 2022, the following expenditure cutting measures will be put in place;
- Discretionary spending is to be further cut by an additional 10%: The Ministry of Finance is currently meeting with MDAs to review their spending plans for the rest of the three (3) quarters to achieve the discretionary expenditure cuts;
- A 50% cut in fuel coupon allocations for all political appointees and Heads of government institutions, including SOEs, effective 1st April 2022;
- Government has imposed a complete moratorium on the purchase of imported vehicles for the rest of the year. This will affect all new orders, especially 4-wheel drives.
- Government has imposed a moratorium on all foreign travels, except pre-approved critical/statutory travels
- Government will conclude on-going measures to eliminate “ghost” workers from the Government payroll by end December 2022;
- Government will conclude the renegotiation of the Energy Sector IPPs capacity charges by end of Q3-2022 to further reduce excess capacity payments by 20% to generate a total savings of GHS1.5 billion;
- Impose a moratorium on establishment of new public sector institutions by end April, 2022;
- Prioritise ongoing public projects over new projects. This is to enhance the efficient use of limited public funds over the period by finishing ongoing or stalled but approved projects;
- Reduce expenditure on all meetings and conferences by 50%, effective immediately;
- Cabinet approved that Ministers and the Heads of SOEs to contribute 30 percent of their salaries from April to December 2022 to the Consolidated Fund
- Pursue a comprehensive re-profiling strategies to reduce the interest expense burden on the fiscal; and
- liaise with Organised Labour and Employers Association to implement with immediate effect, the measures captured in the Kwahu Declaration of the 2022 National Labour 13 Conference, including reforms towards addressing salary inequities / inequalities (e.g. Article 71 Office Holders), the weak link between pay to productivity and the sustainability of the payroll
