The government has announced plans to publish audit findings of the cash waterfall mechanism to enhance transparency and accountability within the country’s energy sector.
This move comes amidst significant financial challenges the sector faces, including a substantial debt burden owed to independent power producers amounting to over one billion dollars.
To address the mounting debt, the government introduced the cash waterfall mechanism in July 2017, aiming to streamline revenue collection and distribution.
However, the mechanism’s effectiveness has been limited, prompting the need for improved transparency and addressing implementation challenges.
Finance Minister Dr. Mohammed Amin Adam emphasized the importance of the cash waterfall mechanism during the 2024 World Bank and IMF Spring meetings, stating that audit findings will be published to ensure transparency.
“The cash waterfall mechanism is important because at least it ensures that there’s cash flow, every player in the value chain has some cash flow so that they can be able to meet their operational cost but it’s important to also state that we’ve had challenges implementing the cash waterfall mechanism as a result of which through collaboration with the World Bank, with the IMF, we have instituted some measures to make it effective.
One of the measures we have introduced is to audit the cash waterfall mechanism quarterly. But we have also been required to publish the audit findings.”
Energy analyst Dr. Yussif Sulemana supports this move, believing it will contribute to tackling fiscal challenges in the sector by promoting transparency.
“I think it’s a step in the right direction for transparency. So if you notice the problem that we have, some of them are induced and that has made it multifaceted and that has made it difficult to disengage which you need to tackle, which you need to prioritize.”
