ECG continues to reel under GH¢1.6bn gov’t debt

Data from the Electricity Company of Ghana indicate that government still owes the company an outstanding amount of GH¢1.6bn, in unpaid bills and subsidies, which, workers say, continues to put a strain on its operations.

The amount constitutes unpaid bills by Ministries, Departments and Agencies (MDAs), the Ghana Water Company Limited (GWCL,) as well as accumulated subsidies as at the first quarter of this year.

Figures the B&FT obtained from the ECG indicate that as at March this year, MDAs owed more than GH¢621 million while debt accrued by the Ghana Water Company also stood at GH¢324 million. In terms of subsidies, government has an outstanding debt of GH¢654 million to settle.

Workers of the troubled power distributor, belonging to the Public Utilities Workers Union (PUWU) of the Trades Union Congress, argue that the debt, among other things, is preventing the ECG from rolling out initiatives such as one-day service connection as announced in 2014.

According to the General Secretary of PUWU, Michael Adumata Nyantakyi, several efforts to make the MMDAs settle their bills have been frustrated, sometimes by pressure from politicians, such that the company was forced to reconnect organisations it had disconnected from the grid.

As part of the conditions for the release of the Millennium Challenge Compact money, the US government insisted that the government of Ghana settles its bills, which is part of the so-called legacy debt in the energy sector, and for which the Energy Sector Levies were introduced.

The government has since made some payments, although the huge chunk remains to be cleared. Last year government, a report of the Finance Committee of Parliament said government had, in five quarterly installments, paid a total of GH¢180million to the ECG, in what is christened the Electric Distribution Utility Payment Action Plan.

The Committee referred to the payments as constituting “substantial compliance” with one of the conditions the country must meet before the US$498million MCC money is released in full.

As part of the Millennium Challenge Compact II, government is expected to settle all its outstanding debts to ECG before a private entity takes over the management of the company.

The money from the compact is to be used for, among other things, an ECG Financial and Operational Turnaround Project, a NEDCo Financial and Operational Turnaround Project, and a Regulatory Strengthening and Capacity Building Project.

Ahead of the full implementation of the Compact II, the PUWU General Secretary called on the Energy Minister, Boakye Agarko, to desist from making unsubstantiated claims about the company.

Speaking to journalists and officials from the Millennium Development Authority (MiDA) after the inauguration of a 7-member ECG PSP Stakeholders’ Committee in Accra, the minister said out of a GH¢130 million weekly revenue target, the ECG was collecting only GH¢50 million.

But the PUWU General Secretary told the B&FT in an interview that the minister’s statement was inaccurate and unfortunate.

According to him, ECG’s current average weekly collection is GH¢104 million, as against a target of GH¢130 million.

This, he said, excludes indebtedness by Metropolitan, Municipal & District Assemblies (MMDAs) and Ghana Water Company Limited, which are state entities.

Mr. Nyantakyi said the pronouncements by the Energy Minister will not inure to the benefit of ECG or the country, “because at the end of the day, even if you are going ahead with this PSP, you are projecting a very weak company that will weaken the negotiations with any prospective bidder, and we think the Minister ought to look at the bigger picture and see how to position ECG to be a company that can provide value for Ghana and Ghanaians.”