PURC notifies energy minister over ECG's imminent bankruptcy

The Public Utilities Regulatory Commission (PURC) has raised concern regarding the impending insolvency of the Electricity Company of Ghana (ECG).

The electricity distribution company's ongoing financial problems, according to the PURC, must be addressed.

“The Commission has noted the persistent financial challenges facing the Electricity Company of Ghana (ECG) is a matter of grave concern not only for ECG but for the entire energy sector. These challenges as contained in the letters submitted by ECG, highlighting the imminent risk of bankruptcy,” the utility regulatory body wrote in a letter to the Ministry of Energy dated September 16, 2024.

The PURC said, “Given ECG’s strategic role in the power distribution, its financial instability poses a significant threat to the sustainability of the sector and the security of electricity supply which could lead to a national security threat. The Commission acknowledges that ECG has initiated and started the implementation of digital and metering programmes expected to improve its cash collection.

"However, despite these efforts and the Commission’s decision to increase tariffs by more than 75% since September 2022. ECG’s financial difficulties persist. Indeed, for June and July, 2024 ECG declared GH¢884,200.000.00 and GH¢857.000.000.00 respectively. These amounts were not enough to pay the Tier A plus WAPCo’s bill of $47 million per month,” a report by 3news.com said.

The letter signed by the Executive Director of the PURC, Dr Ishmael Ackah noted that “Unfortunately, in August, 2024 ECG declared less than GH¢800 million. This represents about 42% of the revenue expected by the Commission to be collected and pay to the sector players. The Tier B companies, including Ghana Gas, VRA, GRIDCo, ECG, Bui and the regulators are struggling to get enough to pay staff and administrative cost. This situation underscores the need for deeper introspection and structural changes beyond tariff adjustments.”

KA

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