Cash Waterfall Mechanism designed to benefit IPPs, not fair – VRA

Cash Waterfall Mechanism designed to benefit IPPs, not fair - VRA

The Senior Staff Association of the (VRA) has voiced dissatisfaction with the effects of the updated Cash Waterfall Mechanism (CWM) on the functionality of the VRA. Despite producing approximately 67.5% of the power supplied to Ghana's national grid, the association argues that the revenue disbursement under the CWM disproportionately benefits Independent Power Producers (IPPs), who generate only 32.5% of the power.

The Cash Waterfall Mechanism, a financial model that helps in determining the allocation of the monthly interest and the principal cash flows among the parties involved in a transaction, was implemented in April 2020 and revised in 2023 as part of the Energy Sector Recovery Programme (ESRP) to ensure fairness and transparency in distributing energy revenues among electricity distribution companies; VRA, , ECG and the others. 

However, the VRA Senior Staff said in a statement that the mechanism's implementation has not reflected the intended fairness, as Independent Power Producers (IPPs) receive a predetermined sum of $43 million monthly.

“Currently, all available plants are running 24/7. That cannot be said about IPPs, yet at the end of the month, they are given $43 million which is more than half of all the payments made into the CWM by the ECG,” portions of the statement said.

Addressing the calls to privatise the operations of the Volta River Authority, the association stated that it is the only state-owned power generator that will guarantee energy security. 

“We wish to reiterate that VRA is the only strategic state-owned power utility providing and guaranteeing the energy security for the people of Ghana and for that matter none of its assets must be put on sale.

“The Authority is efficient in operating and managing its assets and thus should be allowed to operate its diverse generation mix, devoid of any unwarranted privatisation.”

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