GH¢3.2bn losses weigh heavily on ECG

Technical and commercial losses of about GH¢3.2billion are threatening the future of state-owned power utility, Electricity Company of Ghana (ECG) and the electricity value chain, says Energy Minister Dr. Matthew Opoku Prempeh.

The company’s losses in current exchange terms amounts to over US$400million and stem from power theft, malfunctioning metres, obsolete infrastructure, ineffective revenue collection, among others, with the minister lamenting: “Which company can be viable if it loses that amount of money?”

“Power theft – those who are stealing power, those whose metres are not working and those who don’t have metres but have electricity – is costing ECG nearly GH¢3.2billion,” he said during the ministry’s ‘meet the press’ briefing in Accra.

Losses from the technical and commercial factors stood at GH¢1.8billion, and GH¢1.5billion respectively in 2021, from GH¢1.4billion, and GH¢1.5billion respectively in 2020. Technical and commercial losses in the last five years (2017 to 2021) reached GH¢8.9billion.

The losses have ripple effects on the entire electricity value chain. For starters, ECG’s failure to collect revenues from all the electricity it sells to consumers means it is unable to pay for the power it buys from generators like Volta River Authority and independent power producers (IPPs), who in turn will not be able to pay for fuel bought from suppliers like Ghana Gas and others to produce the electricity.

In effect, this increases the energy sector-related debt that the minister had warned, at the beginning of 2021, could reach over US$12billion if not addressed. The losses also imply that government’s efforts to rid the sector of its huge debts, in order to improve liquidity and promote sustained growth, could be scuppered.

ECG’s losses are as a result of “our inability to pay, unwillingness to pay, or power theft,” Dr. Opoku Prempeh said, adding: “Every Ghanaian must be responsible to pay for the energy he or she consumes”. To retrieve the revenues, he said a Revenue Protection Taskforce has been set up to help improve collection and compliance.

The minister’s revelations further call into question, implementation of the Cash Waterfall Mechanism (CWM), which seeks to clear power sector-related debt by distributing the revenues from electricity sale proportionately among relevant players involved in the electricity value chain, since ECG is unable to recover all revenues due it.

Explaining how these lapses in revenues are impacting the CWM, he said: “If ECG does not collect enough, nobody gets paid well and there is a tendency that they would want an increased tariff so that they can be paid better”.

Similarly, in October 2021, VRA – the biggest power producer – told this paper that despite CWM’s existence, ECG was only able to pay for about 50 percent to 60 percent of the power it buys from it. The remaining 40 percent, it warned, keeps building up every month, thereby escalating to unsustainable levels if not tackled.