Dissolve the inefficient ECG Management – ACEP to Government

The Africa Centre for Energy Policy (ACEP) has raised alarm regarding the mismanagement of the Electricity Company of Ghana (ECG), calling for the immediate dissolution of its management. This plea comes as the think tank highlights the critical state of ECG’s operations, which are jeopardizing both the company’s viability and the stability of Ghana’s national budget.

At a press conference in Accra, ACEP’s Policy Lead for Petroleum & Conventional Energy, Kodzo Yaotse, pointed to chronic inefficiencies in ECG’s revenue collection as a significant factor contributing to its mounting financial losses. Between 2017 and 2022, ECG’s losses surged from GHS 295 million to an alarming GHS 9.7 billion. Recent data from the Public Utilities Regulatory Commission (PURC) reveals that ECG’s average revenue collection rate from August 2023 to July 2024 was a mere 43%, exacerbating financial pressures on the national budget.

ACEP criticized political leaders for their inaction despite numerous warnings about ECG’s deteriorating performance. Yaotse stated, “Despite numerous warnings, politicians have failed to take decisive action to reform ECG,” noting that the inefficiencies have increasingly burdened taxpayers who subsidize the company’s operations.

A key issue identified is ECG’s lack of transparency in financial management. A PricewaterhouseCoopers (PwC) validation found that ECG operates 61 accounts across 16 banks without providing clear visibility for auditors. This opacity raises serious questions about fund management and accountability. Furthermore, ACEP has expressed skepticism about ECG’s digitalization initiatives, particularly the ECG PowerApp launched in January 2023, which was intended to enhance payment processes but has reportedly led to worsening revenue performance.

The report also alleges that ECG has manipulated exchange rates, resulting in inflated costs reported to the government. This mismanagement culminated in a net exchange loss of GHS 6.5 billion in 2022, escalating to GHS 7 billion in 2023. Coupled with substantial debts owed to Independent Power Producers (IPPs) and gas suppliers, these financial missteps threaten Ghana’s economic recovery following recent debt restructuring efforts.

“The growing fiscal burden imposed by ECG’s poor performance is a ticking time bomb,” warned Yaotse. He emphasized that without immediate corrective measures, Ghana risks facing another debt crisis.

In light of these findings, ACEP has called for an urgent audit of ECG’s contracts and expenditures, particularly regarding its controversial PowerApp development agreement with Hubtel. The organization advocates for a leadership overhaul within ECG to restore effective management and alleviate its detrimental impact on national finances.

As Ghana grapples with increasing financial strain within its energy sector, ACEP’s statement serves as a critical reminder that urgent action is necessary to avert further economic turmoil.

By Derrick Botsyoe || ghananewsonline.com.gh