Power has gone into their heads
Government can’t pay because the cost of the power keeps increasing and the undercover subsidies it has committed to keep exploding in value.
The cost of power and subsidies keep increasing because the government won’t pay its debts and therefore ECG and VRA have to resort to expensive bank loans to keep running (now a cool $1.6 billion in liabilities). This leads to a shortfall of power as VRA can’t find money to invest and pay suppliers. So the government goes and brings in Dubai and Turkish generators that produce power at nearly double the price that VRA can’t pay and sells the stuff to VRA with a wink. VRA sells to ECG with a wink. ECG is like, ‘guys!’
So government now decides to step up the game and ask ECG to cut a neat $100M from sales as subsidies, just like they always do. Government is tired of Ghanaians complaining daily about the cost of power when they get it and complaining when they don’t get it. So, government tells ECG to give Ghanaians $100M worth of free power on government’s tab (yeah, the ‘subsidy’ thing).
ECG says thanks for the $100M that government doesn’t have and thanks for government asking the Turks to bring twice more of the power that ECG can’t pay for. But what about that other $600M of power you made us sell for free on your tab?
Government gives ECG a sharp look and says: Look, YOU actually you owe me (yeah, I’m GNGC-VRA-GRIDCO-BIG-KAHUNA-BURGER-WITH-EVERYTHING-ON-IT, damn!). Bet you forgot that!
What I am going to do, says Government, is go and borrow another $2 billion and spread it around on the books of you and the other guys who owe me. Of course, you are going to use the cash to pay me some of the money you owe and then I am going to pay you back with some of the money you pay and you…er…don’t you worry your little head about that for now.
When all is said and done, you – ECG – are gonna look so damn attractive that someone is going to come over here from The Big Overseas and make some cool money from you. Yeah.
So that’s where we are now, folks. Thanks for your understanding.
PS: This article was first published in 2016