The Public Utilities Regulatory Commission (PURC) has alerted the Presidency and key stakeholders that the Electricity Company of Ghana (ECG) faces potential bankruptcy due to severe financial challenges. In a letter from Executive Secretary Dr. Ismael Ackah, concerns were raised about the impact on other major entities, including the Volta River Authority (VRA), Ghana Grid Company (GRIDCo), and Bui Power Authority.
Dr. Ackah highlighted urgent issues such as delayed salary payments and difficulties in meeting administrative costs. Despite substantial tariff increases exceeding 75% since September 2022 and improvements in cash collection methods, ECG’s financial instability continues. For June and July 2024, ECG reported revenues of GHS 884.2 million and GHS 857 million, respectively—insufficient to cover monthly bills under the Cash Waterfall Mechanism.
The situation deteriorated further in August 2024, with revenues dropping below GHS 800 million, only 42% of what’s needed to pay sector players. A report indicated an GHS 860 million shortfall in payments to Independent Power Producers, leaving major stakeholders struggling to meet operational costs.
Dr. Ackah called for structural changes beyond tariff adjustments and pointed to successful interventions in other countries, such as Kenya and Tanzania, as potential models for ECG. Suggested measures include strict performance indicators, reassessment of power purchase agreements, and independent audits.
PURC emphasizes the need for a comprehensive evaluation of ECG’s financial challenges to avoid bankruptcy, urging collaboration among the Ministry of Energy, ECG, and other stakeholders. The Commission advocates for transparency in revenue collection and considers privatization a viable path for ensuring long-term financial stability in Ghana’s energy sector.
SOURCE: https://dew360.net
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