The Public Utilities Regulatory Commission (PURC) has expressed worry that the Electricity Company of Ghana faces imminent bankruptcy.
The PURC said the continued financial difficulties being experienced by the power distribution company is worrying.
“The Commission has noted the persistent financial challenges facing the Electricity Company of Ghana (ECG). a matter of grave concern not only for ECG but for the entire energy sector. These challenges as contained in the letters submitted by ECG, highlighting the imminent risk of bankruptcy,” the utility regulatory body wrote in a letter to the Ministry of Energy dated September 16.
The PURC noted that, “Given ECG’s strategic role in the power distribution, its financial instability poses a significant threat to the sustainability of the sector and the security of electricity supply which could lead to a national security threat. The Commission acknowledges that ECG has initiated and started the implementation of digital and metering programmes expected to improve its cash collection. However, despite these efforts and the Commission’s decision to increase tariffs by more than 75% since September 2022. ECG’s financial difficulties persist. Indeed, for June and July, 2024 ECG declared GHS 884,200.000.00 and GHS 857.000.000.00 respectively. These amounts were not enough to pay the Tier A plus WAPCo’s bill of $47 million per month.”
The letter signed by the Executive Director of the PURC, Dr Ishmael Ackah noted that “Unfortunately, in August, 2024 ECG declared less than GHS 800 million. This represents about 42% of the revenue expected by the Commission to be collected and pay to the sector players. The Tier B companies. including Ghana Gas. VRA, GRIDCo, ECG , Bui and the regulators are struggling to get enough to pay staff and administrative cost. This situation underscores the need for deeper introspection and structural changes beyond tariff adjustments.”
“In view of the above, the Commission recommends that the Ministry of Energy, in collaboration with ECG, the State Interests and Governance Authority (SIGA), the Ministry of Finance, the Ministry of Public Enterprises and other key stakeholders, engage in a comprehensive examination of the root causes of ECG’s financial difficulties. Such an exercise should aim to chart a path for transforming the company and safeguarding the energy sector,” the PURC suggested.
As the way for, PURC said it would expect “ECG to provide transparency on key issues such as:
• Revenue collection versus CWM declarations:
• Major contracts and other- monthly commitments (e.g., meters, Hubtel, loans);
• Commercial and technical losses:
• Non-core activities and structural challenges, such as fuel payments, that are impeding the company’s ability to achieve financial sustainability.”
Meanwhile, a source close to ECG contends that, “Since 2007, the Electricity Company of Ghana has had no major capital injection. The plan for capital Injection was PDS and that one failed for various reasons.
The source added that “ECG has gone through massive transformation and currently is looking like a modern utility.
But the biggest threat is the forex, because most of the company’s inputs are in dollars. This letter is a clear shift that there is confidence in the direction that ECG is going……we admit there are a few scattered billing issues but largely there is a positive trend.
