ECG misses GHS 1.2bn revenue target for 2020
State-owned power distribution company, the Electricity Company of Ghana (ECG), for the year 2020 missed its revenue target of GHS 1.2 billion.
The power distributor’s failure to achieve its set revenue target according to a report by the Centre for Democratic Governance- Ghana (CDD-Gh) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) was partly due to the electricity subsidy given by the government to lifeline and other category of consumers amid the heat of the Covid pandemic last year.
Also, it was the result of the impact of the Covid pandemic on the operations of the power distributor.
“Data from the Public Utility Regulatory Commission (PURC) shows that it cost government GH¢240 million a month to provide free energy for all Ghanaians from March to June and GH¢20 million a month for lifeline users, even though these costs are yet to be fully paid by government especially to the Northern Electricity Distribution Company (NEDCO),” notes the report titled Impact of Covid-19 on Government’s Reform Programmes in Ghana.
Per the report, the partial lockdown period in Ghana and the week after, saw an exponential surge in energy utilization without a corresponding increase in anticipated revenue.
The consumption of electricity grew by 10.2% in 2020 due to the fact that more people stayed home to observe the restrictions or had lost their jobs leading to a rise in domestic demand.
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“Projected energy consumption for 2020 was reviewed upwards from 19,594 Giga Watt Hours (GWh) to 19,684.73 GWh. This outstripped consumption for 2019 which was 17,887GWh (Energy Commission, 2021) even though the system peak demand for 2020 was revised downward from 3,115 MW to 3,061 MW because of reduced load uptake by Volta Aluminium Company Limited (VALCO),” asserts the report.
”This implied that more funds were needed to produce and distribute energy to homes and manufacturing industries that were still operating. Unfortunately, COVID-19 affected the operations of energy producers and the main energy distributor. For instance, most of the targets set by the Electricity Company of Ghana (ECG) for 2020 including growth in revenue and System Average Interruption Frequency Index were not achieved,” it added.
Per the report, the ECG was able to raise GHS 760.786 million (62.5 percent) of the targeted revenue of GHS 1.2 billion while some 29.59 percent system losses as against the target of 23 percent were recorded.
The report further notes that, the fall in ECG’s revenue invariably contributed to the already rising energy sector debt and other challenges in the sector.
Currently, Ghana’s energy sector debt stands at $7.5 billion.
Based on projections made under the Energy Sector Recovery Programme, it was expected that annual sector debt would grow by US$2.7 billion with accrued debt reaching $12.6 billion by 2023 largely due to the Pay or Take agreement for excess capacity generated and agreements to procure more gas.
The implementation of the Energy Sector Recovery Programme which was initiated in 2019 has however helped reduce the debt by $5.1 billion and also reduced the annual sector debt rate to $1 billion.
