ACEP Exposes ECG’s Financial Mismanagement, Warns of Looming Economic Crisis
The African Centre for Energy Policy (ACEP) has issued a damning indictment of the Electricity Company of Ghana (ECG), accusing the state utility of gross financial mismanagement that threatens to undermine Ghana’s economic stability.
In a press release, ACEP outlined how systemic inefficiencies at ECG, compounded by political inertia, have escalated the utility’s losses and created a ticking fiscal time bomb for the country.
ACEP’s statement comes at a time when the government is grappling with a mounting debt burden, and the International Monetary Fund (IMF) has urged structural reforms to ensure fiscal discipline.
Since Ghana entered an IMF program in 2022, one of the core conditions was for the government to address ECG’s persistent financial shortfalls, which have placed an unsustainable strain on public resources.
However, ACEP’s statement suggests that far from reforming ECG’s financial woes have only deepened, exacerbating the pressure on the national budget.
A Ballooning Financial Deficit
The most glaring issue highlighted by ACEP is ECG’s inability to collect sufficient revenue for the electricity it supplies, a challenge that has worsened over time despite the company’s claims of improvement.
According to the statement, ECG’s financial losses ballooned from GHS 295 million in 2017 to a staggering GHS 9.7 billion in 2022. This troubling trend has shown no signs of abating, with ECG’s losses now reaching levels that have sparked serious concern across government, regulatory bodies, and civil society.
Data published by the Public Utilities Regulatory Commission (PURC) shows that ECG recorded under-recoveries totaling GHS 13.6 billion between August 2023 and July 2024, with a dismal average revenue collection rate of just 43% during this period.
ACEP described this figure as “abysmal,” noting that despite recent digitalization efforts, including the launch of the ECG PowerApp in January 2023, the company has failed to achieve any meaningful improvement in its revenue collection.
The PowerApp was intended to enhance ECG’s ability to collect payments, replacing an internally developed app that had been in operation until December 2022.
However, ACEP argues that this transition has not only failed to boost revenue but may have worsened the situation. The statement hints that the decision to switch apps was procurement-driven, with little regard for operational efficiency, and raises concerns about the transparency of the contract awarded to Hubtel, the company tasked with developing and maintaining the new system.
Questions Over Financial Transparency
One of the most damning revelations in ACEP’s statement is the lack of transparency surrounding ECG’s financial operations. Despite repeated directives from the government and regulatory bodies, ECG has continued to operate 61 separate bank accounts across 16 financial institutions, making it difficult for auditors to track the company’s cash flows.
This fragmented accounting structure violates the clear directive to consolidate revenues into a single account, a measure designed to ensure greater accountability and reduce opportunities for financial impropriety.
“ECG’s refusal to comply with basic transparency measures speaks to a broader culture of impunity that has taken root within the company,” ACEP stated. “This lack of accountability not only undermines efforts to improve the company’s financial health but also jeopardizes the sustainability of Ghana’s energy sector as a whole.”
This opacity has also raised red flags with international auditors, such as PwC, which validated ECG’s revenue collection system and uncovered several significant discrepancies. In particular, the report highlighted that ECG has failed to properly account for the revenue it collects, raising further questions about its internal controls.
Costly Outsourcing Decisions
ACEP also drew attention to ECG’s decision to outsource the development and maintenance of its payment systems to Hubtel, a move that has cost the company dearly.
According to the contract obtained by ACEP, ECG agreed to pay Hubtel GHS 171.8 million for the design and development of the payment platform, with ongoing service charges amounting to 0.95% of all revenues collected. Between November 2022 and December 2023, ECG paid more than GHS 100 million in cumulative service charges.
However, discrepancies between ECG’s reported costs and those disclosed by Hubtel have raised alarm. While ECG cited GHS 171.8 million as the total framework cost, Hubtel published the development cost at US$25 million (GHS 315 million), of which US$12 million (GHS 151 million) had already been paid by ECG.
“The scale of these payments, and the discrepancies in reported figures, suggest a lack of due diligence in ECG’s contracting processes,” ACEP remarked. “Moreover, the decision to outsource such a critical function at a time when the company’s finances are already stretched demonstrates poor judgement on the part of ECG’s management.”
Exchange Rate Manipulations
ACEP’s report also accuses ECG of manipulating exchange rates in its transactions, further eroding the company’s financial standing. ACEP further notes that ECG reported exchange rates significantly higher than those in the interbank market, resulting in net exchange losses of GHS 6.5 billion in 2022, up from GHS 609 million in 2021. In 2023, this figure rose to GHS 7 billion, a level ACEP described as “unsustainable.”
Such losses are particularly damaging given ECG’s role in the broader energy value chain. As a major purchaser of electricity from Independent Power Producers (IPPs) and other suppliers, ECG’s financial instability threatens to undermine the entire sector.
Already, some IPPs have drawn on payment guarantees from the government to cover unpaid debts, further straining public finances.
Looming Economic Crisis
ACEP warned that the continued mismanagement of ECG could have far-reaching consequences for Ghana’s economy. With power sector shortfalls between 2019 and 2023 totaling US$8.25 billion, the fiscal burden on the government is becoming unsustainable.
The growing debt owed to IPPs and gas suppliers could soon trigger a new debt crisis, just as the country begins to recover from its recent domestic and international debt restructuring efforts.
To avert such a crisis, ACEP has called for immediate reforms at ECG. The Centre recommended that the PURC exercise its regulatory authority more forcefully, including a full audit of the Hubtel contract to ensure value for money.
Additionally, ACEP urged the government to replace ECG’s current management with a more competent and transparent leadership team capable of steering the company toward financial stability.
“ECG’s current trajectory is untenable,” the report concluded. “Without decisive action, the company’s ongoing mismanagement will continue to undermine Ghana’s economic recovery and pose a significant risk to the country’s fiscal sustainability.”
