Mismanagement of ECG Pushing Ghana toward Economic Crisis – ACEP Warns
The African Centre for Energy Policy (ACEP) has raised alarms over severe financial mismanagement at the Electricity Company of Ghana (ECG), warning that the company’s inefficiencies are threatening not only its survival but also Ghana’s broader economic stability.
At a press briefing on Thursday, September 19, Kodzo Yaotse, ACEP’s Policy Lead for Petroleum and Conventional Energy, issued a stark statement calling for immediate reforms to prevent further damage to the national budget and Ghana’s development efforts.
“The political inertia preventing ECG from delivering value to the people of Ghana continues to harm the national budget and undermine economic progress. The current situation is unsustainable,” Yaotse said.
Mounting Losses
According to ACEP, ECG’s net losses have surged dramatically, from GH¢295 million in 2017 to a staggering GH¢9.7 billion by 2022, with no improvement in sight for 2023. Yaotse noted that despite public relations efforts by ECG, the company’s financial performance is worsening.
Data from the Public Utilities Regulatory Commission (PURC) paints a grim picture, showing that ECG’s revenue collection rate averaged just 43% between August 2023 and July 2024, dropping as low as 34% in some months.
“This poor performance calls into question ECG’s much-hyped digitalization initiatives, particularly the ECG PowerApp introduced in January 2023. Instead of enhancing revenue collection, the app has compounded the problem,” Yaotse added.
Lack of Transparency
Beyond poor revenue collection, ACEP pointed to a more troubling issue: ECG’s lack of transparency regarding its limited funds. A recent PwC audit revealed that ECG still operates 61 bank accounts across 16 different banks, defying a directive from both PURC and the President to consolidate collections into a single account.
“ECG’s blatant disregard for regulations has rendered it ungovernable. The PURC is practically begging for transparency,” Yaotse remarked, emphasizing the regulatory body’s lack of authority to hold ECG accountable.
Controversial Hubtel Contract
One of the clearest examples of ECG’s mismanagement is its sole-sourced contract with Hubtel Ltd. According to Yaotse, the contract, hastily implemented, has cost the state millions in service charges. ECG claims the project cost GH¢171.8 million, while Hubtel asserts it was closer to GH¢315 million. So far, over GH¢100 million has been paid in service charges alone.
“This contract is a prime example of procurement-driven decisions putting the country at risk. ECG abandoned its internal capacity to develop its own payment system, opting for an overpriced outsourced service, with disastrous results,” Yaotse said.
Exchange Rate Manipulation
Another major concern is ECG’s handling of exchange rates. In 2022, ECG’s manipulation of rates resulted in net exchange losses of GH¢6.5 billion, a significant jump from GH¢609 million in 2021. These losses further ballooned to GH¢7 billion in 2023, with ACEP’s requests for transparency on historical exchange rates remaining unaddressed.
“This manipulation has eroded ECG’s ability to pay its value chain participants and diverted public resources from essential social programs,” Yaotse warned.
Looming Debt Crisis
ECG’s financial struggles have escalated into a broader economic crisis, with Independent Power Producers (IPPs) and gas suppliers demanding overdue payments. Karpower, one of Ghana’s largest IPPs, has already drawn US$112 million in guarantees to settle debts, while gas suppliers are calling for an additional US$400 million in payments.
“This is a ticking time bomb. If immediate action is not taken to reform ECG, Ghana risks undoing the progress made in its recent debt restructuring efforts,” Yaotse cautioned.
ACEP’s Recommendations
ACEP proposed a three-pronged approach to address the crisis:
Strengthening PURC’s Oversight: PURC must take aggressive steps to gain visibility into ECG’s revenue collection and expenditure to ensure the sustainability of the sector.
Auditing the Hubtel Contract: An immediate audit of the ECG-Hubtel contract should be conducted to clarify the discrepancies in reported costs and ensure value for money.
Leadership Change: ECG’s current management should be replaced with effective and transparent leadership to salvage the company and prevent further economic damage.
ACEP’s warning underscores the urgent need for reform at ECG to avoid deepening the financial strain on Ghana’s economy. Without swift action, the country risks sliding back into a debt crisis.
For more information, contact ExpressNewsGhana via email at expressnewsgh@gmail.com or WhatsApp at +233 0543 900 732.
Source: Felix Nyaaba // ExpressNewsGhana.com
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