- ECG’s 2025 accounts expose severe financial fragility
The recently released audited 2025 financial statements of the Electricity Company of Ghana (ECG) provide the clearest picture yet of the utility’s financial position. Taken together, the balance sheet and income statement show that while ECG remains operationally indispensable to Ghana’s economy, it continues to face severe financial stress arising from a combination of structural, operational and policy-related challenges rather than simply weak commercial performance. These include high system losses, poor revenue collection, foreign exchange exposure, growing trade payables, legacy debt obligations, regulated tariffs that do not always reflect actual costs, and the politically difficult task of disconnecting indebted public institutions and vulnerable consumers.
Revenue growth negated by rising costs
The 2025 income statement shows that ECG continues to generate substantial revenues from electricity sales, reflecting growing electricity demand from households, commercial users and industry. However, the increase in revenue has been outweighed by even faster growth in operating costs. While total revenue last year was GHc22.109 billion, the total cost of sales was GHc34.767 billion, amounting to a shortfall of GHc12.658 billion, ECG’s gross loss.
This looks to be a step backwards from the gross profit of GHc 4.601 billion recorded in 2024 but the reversal was basically because in that year, government gave ECG a grant of GHc17.035 billion, whereas last year state support only came in the form of repayable loans which helped drive up its loan liabilities due after a year or more to GHc21.910 billion as at the end of 2025, from GHc2.587 billion a year earlier.
The largest expenditure continues to be the cost of purchased electricity from the Volta River Authority, Independent Power Producers (IPPs) and other suppliers. Since much of Ghana’s electricity is generated under dollar-denominated power purchase agreements, depreciation of the cedi immediately raises ECG’s procurement costs even before any increase in electricity consumption. In 2025 ECG’s power purchases of GHc26.719 billion were GHc5.877 billion higher than the GHc20.842 billion it made from selling that power.
Administrative expenses also remain significant, at GHc2.307 billion last year reflecting personnel costs; maintenance of an ageing distribution network; nationwide customer service operations; information technology investments; and the depreciation of network assets. Instructively however those expenses were lower than the GHc2.869 billion incurred in 2024, indicating room for administrative cost cutting.
Finance costs remain elevated because ECG continues to depend heavily on borrowing and supplier credit to finance operations. In 2025, with gross finance costs easily outstripping finance income, the company incurred a net finance cost of GHc297.717 million although this too compares favourably with the net finance cost of GHc366.697 million incurred in 2024.
Even before accounting for net financial losses, operating margins remain extremely thin and, after administrative costs were factored in the company recorded an operating loss of GHc14.33 billion in 2025– against a government grant facilitated GHc1.803 billion operating profit in 2024 – despite strong revenues.
Ultimately, ECG’s pre tax losses of GHc2.491 billion were far less than 2024’s GHc7.397 billion. But this was only because the cedi’s sharp appreciation in 2025 gifted the company GHc12.158 billion in foreign exchange gains, a complete reversal from the GHc8.838 billion forex losses it suffered during 2024’s cedi depreciation.
All this illustrates an important point: ECG’s problem is not primarily insufficient sales. Rather, the utility struggles to convert sales into cash because of collection inefficiencies and tariffs that do not fully recover costs.
Liquidity remains the principal concern
The balance sheet paints an even more challenging picture.
Although ECG owned GHc61.345 billion worth of fixed assets as the end of 2025—including substations, transformers, transmission equipment, poles, cables and meters—these fixed assets are largely illiquid and cannot readily be converted into cash.
More worrying is the working capital position.
Current liabilities of (GHc49.882 billion, as at the end of 2025) continue to exceed readily available liquid assets (GHc21.509 billion) by a considerable margin. Trade payables to electricity generators and fuel suppliers remain substantial, at GHc46.736 billion by the end of 2025 – although this is down from GHc 54.502 billion a year earlier – reflecting years of accumulated payment arrears throughout Ghana’s power sector.
Accounts receivable are also exceptionally high, standing at GHc21.105 billion by the end of 2025, up from GHc15.138 billion in 2024. A significant portion consists of unpaid bills owed by Ministries, Departments and Agencies (MDAs); Metropolitan, Municipal and District Assemblies; Ghana Water Limited; educational institutions; health facilities; security agencies; state-owned enterprises; and lots of private commercial customers.
Many of these receivables have remained outstanding for years and their collectability remains uncertain.
This weak liquidity position forces ECG into a vicious cycle. Customers delay payment so ECG lacks cash which makes delay payment to generators who consequently face liquidity constraints forcing government intervention through guarantees or special financing arrangements.
The balance sheet therefore highlights that ECG’s greatest challenge is cash flow rather than asset ownership.
Overall, ECG’s financial position can be characterized as one of operational viability but financial fragility. The company remains indispensable because no alternative national distributor currently exists with comparable scale.
However, several financial indicators remain weak. It suffers from high leverage, weak liquidity ratios, large receivables, substantial trade payables, continuing dependence on government support and exposure to exchange-rate volatility.
This means lenders continue to perceive ECG as carrying elevated credit risk despite its strategic importance. It also means that much of Ghana’s energy-sector debt ultimately remains contingent on government support.
Structural rather than managerial problems
While management efficiency remains important, many of ECG’s financial problems originate outside the company itself.
For instance electricity tariffs are determined by the Public Utilities Regulatory Commission. Political pressure often discourages full cost-reflective tariffs, especially during periods of high inflation.
Also much of ECG’s input costs are linked to the US dollar while most revenues are collected in cedis, exposing it to foreign exchange risk
Government institutions often accumulate large unpaid electricity bills, weakening ECG’s cash flow, while at the same time historical legacy debt (such as the outstanding amount still owed it by the failed Power Distribution Services initiative) continues to affect the company’s balance sheet despite periodic restructuring.
Added to all these structural constraints are the technical losses from ageing infrastructure and commercial losses from theft, illegal connections and meter bypass which continue to reduce recoverable revenue.
Improving ECG’s financial performance
Improving ECG’s finances requires balancing commercial discipline with political realities.
Rather than widespread power cuts, ECG could negotiate structured repayment plans; deploy prepaid meters more extensively; automate collections; intensify digital payment channels; and use smart metering for large commercial customers.
These measures can improve cash flow while limiting public backlash.
One of the quickest improvements would come from enforcing timely payment by public institutions. Government could establish automatic deductions from budgetary allocations for electricity bills. This would significantly reduce receivables without increasing tariffs.
Investments in network modernization can substantially improve finances too. Priority areas include replacing obsolete transformers, installing smart meters expanding remote monitoring and reducing illegal connections.
Every percentage point reduction in losses translates into millions of cedis in additional recoverable revenue.
The most tempting option from a purely financial point of view would be to simply increase tariffs. But sudden tariff increases remain politically difficult.
Instead, the regulator should continue applying predictable quarterly adjustments tied to inflation, exchange rates and fuel prices. Gradual adjustments are generally easier for consumers to absorb than infrequent large increases.
Actually government is already on the right path by investing in the substitution of relatively expensive liquid fuels as feedstock for power generation with cheaper – and cleaner – locally produced gas, which could drastically reduce both power generation costs and foreign exchange outlays.
Added to all this, Improving financial discipline throughout the energy sector may require stronger revenue management mechanisms that ensure collections are allocated transparently among generators, transmitters and distributors to improve confidence among suppliers and lenders.
Political sensitivity
Unlike most commercial enterprises, ECG cannot simply maximize profits.
Electricity is an essential public service whose affordability directly affects household welfare, business competitiveness and inflation. Aggressive disconnections, steep tariff increases or rapid staff reductions could provoke significant political and social opposition. It is instructive that government’s plans for private sector participation in billing and revenue collection is facing intense push back from ECG’s workers and customers alike.
Consequently, reforms must carefully balance financial sustainability with social protection. Targeted subsidies for low-income consumers, improved collection from high-volume users and public institutions, and investments that reduce losses offer a more politically sustainable path than across-the-board tariff increases.
