The Public Utilities Regulatory Commission (PURC) has raised alarm over the looming bankruptcy of the Electricity Company of Ghana (ECG), warning that its financial instability could jeopardize the entire energy sector.
In a letter addressed to the Presidency, Energy Minister, and other key stakeholders, PURC Executive Secretary, Dr. Ismael Ackah, detailed how ECG’s financial challenges have already led to delays in salary payments and administrative costs.
“Immediate action is required,” Dr. Ackah emphasized, highlighting the dire state of both the ECG and other entities such as the Volta River Authority (VRA) and Ghana Grid Company (GRIDCo).
Despite efforts to boost revenue through digitalization, improved metering, and a 75% increase in tariffs since 2022, ECG’s financial woes persist.
According to PURC, ECG’s revenues for June and July 2024, totaling GHS 884.2 million and GHS 857 million respectively, were insufficient to meet critical payment obligations.
The crisis worsened in August 2024 when revenues dropped below GHS 800 million, covering only 42% of necessary payments under the Cash Waterfall Mechanism.
Independent power producers were shortchanged by GHS 860 million, leaving Ghana Gas, VRA, and other entities unable to meet operational costs.
Drawing from regional solutions, the PURC recommends structural reforms for ECG, including performance-based interventions similar to those implemented in Kenya and Tanzania.
Privatization, performance indicators, and economic audits were suggested to tackle ECG’s deep-rooted financial issues.
“Without bold reforms, the situation will continue to spiral,” Dr. Ackah warned, calling for urgent collaborative efforts from the Ministry of Energy, Finance, and other stakeholders to rescue ECG and safeguard the energy sector’s future.
