The Public Utilities Regulatory Commission (PURC) has published a detailed report validating the Electricity Company of Ghana’s (ECG) revenue and collection accounts.
This review forms part of the Ghana Energy Sector Recovery Programme (GESRP), spearheaded by the Ministry of Energy to address financial challenges in the energy sector.
Key Findings
1. Cash Waterfall Mechanism (CWM):
- The CWM, introduced to ensure equitable revenue distribution among stakeholders, received a thorough review.
- ECG’s application of the CWM revealed irregularities in disbursements, with certain stakeholders receiving delayed payments.
- Approximately GHC 4.5 billion in total revenue was funneled through the mechanism in 2024, but inefficiencies in allocation led to bottlenecks.
2. Billing and Invoicing Efficiency:
- ECG issued over 15 million bills in 2024, with an estimated error margin of 5%, resulting in a revenue loss of GHC 225 million.
- Inaccurate customer records and delays in reconciling accounts were major contributors.
3. Cash Collection Performance:
- ECG collected GHC 12 billion in 2024, reflecting a 75% collection rate against billed amounts.
- However, discrepancies between regions were stark: Greater Accra achieved a 92% collection rate, while some northern regions lagged at 45%, pointing to systemic inefficiencies.
Recommendations
PURC outlined specific steps for ECG to strengthen its financial processes:
- Upgrade the CWM: Incorporate automated systems to enhance transparency and minimize allocation delays.
- Audit Customer Records: Implement a nationwide campaign to validate customer information, reducing billing errors.
- Incentivize Regional Performance: Develop targeted programs to improve collections in underperforming regions.
Implications
- These inefficiencies impact ECG’s ability to settle debts with power producers, such as Volta River Authority (VRA) and GRIDCo.
- An estimated GHC 1.2 billion in arrears remains outstanding.
- PURC’s report also emphasizes that improving ECG’s operational efficiency is critical to securing the financial sustainability of Ghana’s energy sector.
What’s Next?
PURC and ECG are set to collaborate on implementing these recommendations over the next 12 months, with quarterly reviews to assess progress.
