The Electricity Company of Ghana (ECG) is facing a daunting task of retrieving GHS 5.7 billion in arrears from defaulting customers. The state-owned power distribution company has been conducting a massive disconnection exercise to recoup the funds from customers who have failed to pay their debts or agree to a payment plan. However, the Managing Director of ECG, Samuel Dubik Mahama, has revealed that the company is considering other alternatives to recover the outstanding debts.
In an interview on Tuesday, Mr Mahama disclosed that ECG would outsource the debt to private companies after the ongoing exercise ends on Friday. He admitted that all the money in default cannot be retrieved in the stipulated time, hence the need to explore other options. Mr Mahama noted that the company would consider selling the debt to private institutions to go and collect the outstanding amounts on its behalf.
ECG’s plan to sell its debt to private institutions is not new, as similar strategies have been adopted by other utility companies across the globe. By outsourcing its debt collection to private firms, ECG can focus on its core operations while the private companies take on the task of retrieving the arrears. It is a mutually beneficial arrangement, as the private institutions stand to make a profit from their efforts while ECG can recover a significant portion of the outstanding debts without spending additional resources on debt collection.
However, Mr Mahama stated that the decision to sell the debt to private institutions would be put before the board of directors of the company, and only large sums of money would be considered for purchase. He emphasized that the company would only consider bids from investors who are interested in purchasing a substantial amount of the debt, rather than small sums.
The Managing Director also stated that private investors who are interested in purchasing the debt would be given a percentage of the outstanding amounts. The option of selling the debt to private institutions is seen as a pragmatic approach to recouping the arrears, and many analysts have applauded the move.
ECG’s efforts to retrieve the outstanding debts have been met with some resistance from defaulting customers, who claim that the company’s billing system is flawed. Some customers have also cited the high tariffs as a reason for their inability to pay their debts. However, ECG has been resolute in its efforts to collect the arrears and has vowed to continue with its disconnection exercise until it recovers a significant portion of the outstanding amounts.
ECG’s decision to outsource its debt collection to private institutions is a smart move that could help the company to recover a substantial portion of the outstanding debts. The move is also seen as a pragmatic approach that could enable the company to focus on its core operations while the private institutions take on the task of retrieving the arrears. It remains to be seen whether the board of directors of ECG will approve the plan to sell the debt to private institutions, but if it does, it could be a game-changer for the company.
Source: norvanreports.com