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ECG Is Cash-Strapped   
 
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04-Jul-2013  
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William Hutton-Mensah – ECG Boss
 
 
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Although the Electricity Company Ghana (ECG) planned to invest US$190 million on average per year between 2012 and 2015 to upgrade and expand its network, the company cannot raise the necessary funds because of financial constraints.

The company recorded a slight loss in 2011 and a significantly higher loss of US$44 million in 2012.

It is expected to register loss to the tune of US$60 million. A recent World Bank report, which made this known emphasized: “ECG’s cash flow difficulties are even worst, as a significant portion of its revenue is uncollected.”

It noted that with about US$800 million sales annually, ECG has an over-extended unreliable distribution network whose failure imposes costs on the economy and discourages foreign investment.

“At a time when the Ghanaian economy is achieving sustained growth in excess of 6 percent annually, with ambitions to raise this further, the power sector has become a drag on the economy,” it said.

The report indicated that the depreciation of the Ghana Cedi, for example, worsened the costs of various obligations. It further said ECG has great difficultly in collecting revenues from government and public sector organizations, which are indebted to the company to the tune of GH˘222 million at the end of 2012.

“The Government must make these payments expeditiously, and modify the current payments expeditiously and modify the current payments mechanism to institute direct payment of electricity bills by as many state agencies as possible,” it advised.

The report, however, indicated that ECG’s tariffs are too low because the Public Utilities Regulatory Commission (PURC) has not adjusted tariffs in line with inflation and depreciation of the Cedi since 2011.

“It is essential that PURC raises tariffs quickly and continue to do so periodically as a normal part of its functioning. PURC and the Government should better explain to the public how tariff increases are determined and why they are necessary,” it noted.

It noted that the company has to pay for the lost energy it buys from the Volta River Authority (VRA). The report recommended that ECG must intensify its efforts to collect bills from private customers and cut service for non-payment.
 
 
Source: Lady Agyapong/D-Guide
 
 

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