The Co-chair of the Ghana Extractive Industry Transparency Initiative, Dr. Steve Manteaw, has described as, justified, the Electricity Company of Ghana (ECG) commercial agreement with technology company, Hubtel.
The said agreement, which has generated some controversy recently, made it possible for Hubtel to re-design, develop, and implement a complete overhaul of ECG’s commercial systems and payment frameworks.
Hubtel also took over the responsibility of processing and securing payments of bills, electricity meter credits, vendor quota purchases, and non-energy invoices. The company also collaborated with other major technology service providers and relevant departments within ECG to empower the company’s staff to support revenue collection and growth.
This led to a record rise in revenue collection by ECG in 2023. The financial statements of ECG show this is the highest revenue ever collected by the power distribution company in its recent history. Specifically, available datashows that ECG collected GHC 5.7 billion revenue in 2016, GHC 6.2 billion in 2017, GHC 5.5 billion in 2018, GHC 7.1 billion in 2019 and GHC 8.7 billion in 2022. It was only in 2023 under the commercial agreement with Hubtel that revenue collection soared astronomically to a record GHC 15.75 billion, representing an 81% leap from the revenue collected in 2022.
Before the commercial agreement with Hubtel, ECG had been faced with significant financial and commercial challenges.
In an interview on Joy News’ PM Express on Monday, October 21, Dr. Manteaw argued that the cost-benefit analysis, based on the available financial statements of ECG, revealed that the deal added a lot value to ECG.
“We need to also look at the cost and benefit side. How much has the company [Hubtel] been able to add to our revenue and what has the cost been? In terms of international best practice and benchmarking, how do we see the equation?”, he quizzed.
He explained that the financial statements need to be looked at closely to appreciate that the deal was worth it, saying, “If ECG was doing something in the region of 700 million cedis monthly before the inception [of the ECG-Hubtel agreement) and now, they’re doing somewhere 1.3 billion cedis, then of course they have added over 600 million cedis to the revenue, and so for me if you were even taking 10% of the added revenue, that’s about 60 million, I’m not too sure what the cost has been in terms of the real figures but I’m saying that there has been a certain jump in revenue which justifies the deal because we were not doing very well before the inception of this particular arrangement”, he explained.
Dr. Manteaw says even though he is not a pro-privatisation, where privatisation becomes necessary, he prefers Ghanaian companies to take up such deals explaining “If you have a Ghanaian who can give us the solution, why not?” He added that, “I believe it’s better to have a Ghanaian company if you have to do privatization because whatever profit that entity makes remains in the Ghanaian economy”.
This commercial agreement became a subject of controversy when some civil society groups misconstrued the agreement and made wild allegations, but a subsequent explanation and presentation by Hubtel together with experts’ assessment justified the agreement and put the issues to bed.
Source:techfocus24.com