Ghana’s Vice President and Flagbearer of the governing New Patriotic Party (NPP), Dr. Mahamudu Bawumia, has promised to resolve the challenges with the implementation of the Cash Waterfall Mechanism (CWM) if elected as President of Ghana in the upcoming General Elections, scheduled for December 7, 2024.
On page 176 of the NPP Manifesto launched last Sunday, August 18, 2024 the party announced several measures to deal with the challenges in the power sector.
“Under a Bawumia presidency, we will digitise the revenue platform that will apply the Cash Waterfall Mechanism (CWM) sharing ratio at the point of all electricity tariff payments to enhance liquidity within the electricity value chain, increase transparency and reduce indebtedness,” the NPP 2024 Manifesto captured.
The Cash Waterfall Mechanism was proposed by the current government in 2017, when Boakye Agyarko was the Energy Minister, to address liquidity challenges in the sector. However, its implementation was delayed until 2020.
It was to ensure fair and transparent distribution of revenues to all the players in the electricity supply value chain.
In June 2023, President Akufo-Addo and Vice President Mahamadu Bawumia directed revisions to the Cash Waterfall Mechanism (CWM) under the Energy Sector Recovery Programme, due to ECG’s challenges in adhering to existing guidelines.
The directive is aimed at enforcing the CWM guidelines and to enhance its effectiveness.
As part of this, the PURC was tasked with appointing independent auditors for quarterly audits of ECG and NEDCo collections and disbursements to validate declared collections and ensure CWM compliance.
The ECG was instructed to use the CWM as the sole payment mechanism for customer revenues and operate a single holding account for collections. Quarterly audits of ECG’s collections and disbursements were also mandated.
The PURC would validate revenue collections and payments, according to CWM guidelines and reconcile quarterly with MoF and the CWM team to identify any payment shortfalls to be covered by the Finance Ministry.
