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General News Wed, 4 Apr 2001

Crisis in ECG Deepens

The Electricity Company of Ghana (ECG) is in deeper financial crisis, Mr. David B. M.

Vukania, Director of Customer Service, has described the "very unnatural and critical situation" in which the company finds itself.

Vukania has attributed the situation to low tariffs and the fact that ECG has since 1998 not been able to adjust tariff rates even though costs keep rising.

According to Director Vukania, ECG made a net loss of ?780 million in 1998, ?59 billion in 1999 and an expected loss of ?480 billion in 2000.

With the distribution service change under recovery of ?26/kwh, the company experienced a revenue shortfall of about ?79 billion in 1999 and an expected shortfall of ?81 billion for 2000.

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As a result, ECG has sent an SOS message to consumers through series of public fora to support the tariff proposals without which the future of the company hangs in the balance.

At one such public forum in Kumasi to sensitise consumers, Vukania mentioned continued depreciation of the cedi against the dollar and the non-adjustment of tariffs since 1998 as other contributory factors for the present financial crisis facing the company.

He disclosed that between the period 1998 and 2000, ECG undertook rehabilitation, improvement and expansion programmes to the tune of 40 billion US dollars with support from the World Bank and other agencies while it spent ?184 million of its own resources.

ECG also spent ?50 billion on new transformer injection, low voltage improvements and replacement of about 250 damaged transformers.

This situation compelled the company to heavily overdraw from the banks thus affecting urgent maintenance projects at the expense of quality service.

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Vukania said maintaining a tariff of 2.7 cents per unit (?190/kwh), an exchange rate of ?7,026.59 gave a wrong impression that Ghana was more efficient technologically than the US.

He said the ECG was seeking approval from PURC for the adjustment of tariffs to improve services.

The director expressed concern about illegal connections which also contributed to the company's losses.

According to him, ECG raised a total of ?500 million out of 800 cases of illegal connections in Accra alone.

Source: Ghanaian Chronicle