The indebtedness of state power distributor Electricity Company of Ghana (ECG) to the Government of Ghana far outweighs what the Government owes the power company, Deputy Communication Minister Felix Kwakye Ofosu has revealed.

“People talk about indebtedness to ECG; that is true…there is a real effort to pay…but what people don’t speak about often is that ECG also owes Government a substantial amount of money,” Mr Ofosu told Robert Nii Arday Clegg on Starr FM Wednesday.

He said: “Since 1977 Government has been guaranteeing loans for ECG; Government has been buying them transformers and investing heavily in their operations with the understanding that they will pay back, but they have been unable to pay over a variety of reasons.”

“…I can tell you that [what ECG owes Government]… far outweighs what Government owes ECG…You’ll be amazed, so, a way has been found to ensure that we net-off this debt…I can assure you that it is quite substantial,” Mr Ofosu emphasised.

A lot of the tottering power distributor’s problems have been put down to the indebtedness of Government to the company. In 2013, the Director of Customer Service of ECG at the time, Dr. Nicholas Smart-Yeboah, said Government owed the distributor close to US$500 million in bills.

Mr Kwakye Ofosu, however, said the amount owed ECG by the Government is far-dwarfed by what ECG owes the Government.

Still in debt-related concerns in the power sector, he said although the Government of Ghana owes N-GAS of Nigeria some money, the debt issue has never been the reason for which the country has been plunged into darkness.

“People have tended to overemphasise the impact that the indebtedness has on power generation …nobody is able to say or prove that at any point, power supply has been stopped because of the indebtedness, and that has led to power outages. It has never happened. It is a transactional relationship between the VRA representing the Government of Ghana and N-GAZ through WAGPCo…we need to clear the debt, but it has not affected the supply of power,” he said.

The Federal Government of Nigeria recently reached an agreement with Ghana on the modalities to settle the outstanding N33.8bn owed by Ghana’s state power producer Volta River Authority (VRA) on gas supplied for power generation by N-Gaz.

The highlight of the agreement is that the total sum of gas supply debt will be cleared by February 2016 at the latest.

The agreement which was reached about a month ago between a team led by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, and the President of Ghana, John Dramani Mahama, stipulated that VRA will pay the balance of August and September invoices by October 31 at the latest.

It was also agreed that all other supplies as from October will be paid for on or before due date while the backlog of arrears from 2012 will be defrayed by February 2016.

It would be recalled that Nigeria had threatened to cut gas supply to Ghana by 70% over a $181 million debt that had accumulated over the years.

Ghana’s Minister of Power, Dr. Kwabena Donkor, had led a delegation to Abuja prior to the agreement to hold talks with Nigerian authorities with a view to resolving the issue.

N-Gaz is a joint venture company owned by NNPC, Shell and Chevron that delivers gas through the West African Gas Pipeline Company (WAGPCo) to Ghana.