PURC Warns That ECG Could Go Bankrupt Soon If Financial Challenges Not Resolved
- The Public Utilities Regulatory Commission said the Electricity Company of Ghana's debts have reached unsustainable levels
- The PURC said the company is currently struggling to even pay workers' salaries on time and finance any administrative functions
- The PURC also said it was time for the government to begin considering some solutions to save the company from going under
The Public Utilities Regulatory Commission (PURC) has warned that the Electricity Company of Ghana (ECG) could soon go bankrupt due to severe financial difficulties.
The PURC sounded the alarm in a letter addressed to the Presidency, the Energy and Finance Ministers, and other key stakeholders.
Source: Twitter
Dr Ishmael Ackah, the Executive Secretary of the PURC, stated that the situation could have devastating effects on the operations of the Volta River Authority (VRA), Ghana Grid Company (GRIDCo), and the Bui Power Authority.
Dr Ackah said the ECG already has challenges generating enough revenue to pay staff salaries on time and cover administrative costs.
This is despite the ECG’s efforts to improve revenue mobilisation through digital and metering programmes and significant tariff hikes since September 2022.
He said the various interventions have not solved ECG’s financial instability, which, if not addressed, could see the company go bust.
PURC suggests solutions
The PURC has urged critical stakeholders in the power industry to comprehensively examine the underlying cause of ECG’s financial difficulties and find solutions to safeguard both the company and the energy sector.
The Commission also urged the ECG to be transparent about its financial situation and other challenge that impede its financial sustainability.
The Commission further suggested that the government must begin considering privatising ECG to ensure the company's long-term financial sustainability and the stability of the energy sector.
ASEC supports calls for ECG's privatisation
In an interview with YEN.com.gh, Dr Elvis Twumasi, the Director of Research and Innovation at ASEC, noted that privatising the ECG could help the company excel.
He said the previous attempt with the Power Distribution Services (PDS) had shown promise, and there were notable improvements in the ECG's operations and workers' responsiveness.
“These initial successes indicate that privatisation will bring about positive change with the right approach," he said.
He clarified that privatising ECG does not mean selling the company completely but rather privatising its economic functions.
"Ghana can engage multiple local private companies to manage ECG's economic functions, such as infrastructural development, billing, and utility bill collection. This approach allows ECG to focus on the technical aspects of electricity distribution, improving efficiency and service delivery.”
He said privatisation could address these problems by creating a system of checks and balances, ensuring fiscal discipline, and bringing in management expertise to help reduce power and financial losses.
ECG embarks on debt collection exercise
Early this year, YEN.com.gh reported that the ECG embarked on a mass disconnection exercise to reduce debt levels.
The Electricity Company of Ghana's task force were set to disconnect 91 hospitals from the national grid due to debts still owed.
The health facilities, including Korle Bu Teaching Hospital in the Ashanti Region, were said to collectively owe GH¢261 million.
Proofread by Bruce Douglas, senior copy editor at YEN.com.gh
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Source: YEN.com.gh
