A-G’s report: GH¢632K embezzled at NEDCo; procures GH¢196K goods, services from non-VAT entities

Some GH¢632,207.68 was embezzled at the head office of the Northern Electricity Distribution Company (NEDCo) in 2019, the Auditor-General’s report has unearthed.

The Audit Service said: “Our review of Internal Audit Reports covering the 2018 Financial Year of the Company disclosed that a total amount of GH¢632,207.68 in respect of sales revenues collected at three (3) Operational Areas of the Company were not lodged into the respective bank accounts”.

It recommended that the management of NEDCo “intensify its supervisory role over the activities of the Area Managers, the Finance Officers and Account Assistants and also recommended that the sum of GH¢632,207.68 being funds embezzled should be recovered from Tsitsia Samuel and four others”.

Further, the report said the E-Business Suite (Oracle) software, which NEDCo uses for its financial transactions, has not been approved by the Auditor-General “in contravention of Section 11(3) of the Audit Service Act, 2000 (Act 584)” and recommended to the management “to seek retrospective approval from the Auditor-General”.

It said contrary to section 1.4.5 of the Public Procurement Authority’s Manual, “we found that the Company’s Entity Tender Committee (ETC) did not submit any monthly report on its procurement activities to the Public Procurement Authority”.

“We advised the management to strictly comply with the provisions of the procurement laws and manual to avoid any sanctions”, the report noted.

Also, it said contrary to Section 20(d) of the Public Procurement (Amendment) Act, 2016 (Act 914) which legislates meetings, “we noted that the Entity Tender Committee (ETC) met only twice, on the 13th June and 26th November 2018 for the period under review”.

“We urged the management to ensure that the Entity Tender Committee meets at least once every quarter as required by law”, the report said.

It said the management of the NEDCo also procured goods and services worth GH¢196,321.92 from non-VAT registered entities.

“This contravenes Regulation 183(4) of the Financial Administration Regulations (FAR), 2004 (L. I 1802). We advised Management to comply with the provisions of the FAR and any other applicable laws in all their procurement transactions”.

“Tamale Operational Area There was no Inventory Register at the Tamale Area Office of NEDCo to effectively monitor and control its assets contrary to Regulation 183(3) of the FAR 2004, L.I. 1802. We recommended that Management should prepare an inventory register and our office informed for verification failing which Section 98(2) of the Public Financial Management Act 921 shall apply”.

About NEDCo

NEDCo was formed out of the Northern Electricity Department (NED) of the Volta River Authority (VRA). NED itself was established in April 1987 when the northern electricity distribution operations of the then Electricity Corporation of Ghana were ceded to the VRA. The Authority, at the time, was in the process of extending the national grid beyond Kumasi to the northern parts of Ghana. The Volta River Development (Amendment) Law, 1987 (PNDCL 171) was passed to enable VRA to enter the distribution market at the level of the consumer.

At the time of the inception of NED, some major towns were served by diesel generators. Some of these towns with diesel generation included Sunyani, Techiman, Berekum, Wenchi, Dormaa Ahenkro, Tamale, Yendi, Salaga, Bolgatanga, Navrongo, Bawku and Wa. New diesel plants were also installed in Wa through the support of DANIDA in 1989. The electricity distribution network in Wa was also completely rehabilitated through DANIDA support in 1992.

NED was originally started as three operational Areas namely Upper Area, Northern Area and Brong-Ahafo Area. In 1995, however, the Upper Area was divided into Upper East and Upper West Areas. In 2003, the Brong-Ahafo area was also further divided into two areas, Sunyani and Techiman.

In June 1994, the Government of Ghana (GoG) initiated the Power Sector Reform (PSR) programme aimed at bringing efficiency and managerial effectiveness in the Energy Sector in order to improve service delivery to all consumers. In pursuance of the Power Sector Reforms, VRA Management registered NEDCo as a wholly-owned VRA subsidiary with a Board of Directors since 1997 to take over the operations of NED.

NEDCo’s current operations extend into the northern parts of Volta, Ashanti and Western regions. Although NEDCo’s operations cover about 64% of the geographical area of Ghana, the customer density of the operating area is low with access to electricity in the NEDCo operating area put at about 36% as at the end of 2011. The Ghana Government, in line with its vision of making electricity available to all by year 2020, has undertaken power extensions over the years to new towns and communities that were hitherto not served by NEDCo. Customer population has thus grown from less than 20,000 in 1987 to over 380,000 in 2011.

On May 8, 2012, NEDCO was, therefore, officially inaugurated and a new Board of Directors was sworn into office on the same day.

The full operationalisation of NEDCo as a VRA subsidiary seeks to achieve the following objectives:

- Make NEDCo economically viable and sustainable by attracting additional resources from both external and internal sources to supplement VRA’s on-going support of the current NEDCo operations. In this arrangement, NEDCo will also be able to deal directly with multilateral agencies such as the World Bank, JICA, IMF, etc for financial support to prosecute its business agenda. It is important to note that the present support from VRA is inadequate because of equally competing demands from other departments.

- Empower NEDCo to manage its own affairs more effectively by providing it with the right organisational structure and corresponding authority. Thus, NEDCo management will have the authority to take timely and appropriate decisions on customer issues and challenges to improve service delivery without recourse or reference to VRA.

- Empower NEDCo to streamline key procedures and decision-making processes in respect of procurement of its strategic equipment and spares, construction of needed office buildings and staff training and development, all of which are critical to efficient service delivery to our cherished customers.

- Empower NEDCo to deal directly with Government and regulators such as the PURC, EC on key issues pertaining to its viability and sustainability. For instance, NEDCo will be illegible to file a tariff proposal to PURC separate from what is filed by VRA.