ECG records GHS 1.91bn loss in 2021
The Electricity Company of Ghana (ECG) faced a challenging financial year in 2021, reporting a staggering loss of ¢1.913 billion, a stark contrast to the ¢822.549 million profit recorded in 2020. This worrisome decline marked a 332.7% deterioration in the company’s financial performance, as highlighted in the 2022 Auditor General Report.
The report cited a 13.7% decrease in the company’s total income, amounting to ¢12.104 billion in 2021. This decline was primarily attributed to reduced government grants, which served as payments made to power producing companies on behalf of ECG.
While the company managed to lower its direct costs to ¢12.104 billion in 2021 from ¢14.03 billion in 2020, its total expenditure witnessed a 6.1% increase, rising to ¢14.018 billion in 2021. This upward trajectory was mainly driven by escalated power purchase and transmission costs during the year under review.
Examining ECG’s balance sheet, non-current assets experienced a notable 9.7% rise, reaching ¢22.461 billion in 2021, propelled by gains recognized from asset revaluation and the purchase of additional property, plant, and equipment during the year. Similarly, current assets saw a 2.2% increase, reaching ¢8.241 billion in 2021, primarily due to higher trade and other receivables.
However, the company faced challenges on the liability front, as current liabilities witnessed a substantial 21.5% increase, reaching ¢17.698 billion in 2021, driven by an escalation in trade and other payables. The current ratio, reflecting the company’s ability to meet short-term financial obligations, declined from 0.6:1 in 2020 to 0.5:1 in 2021, signaling the company’s inability to adequately address its immediate financial commitments.
The report’s findings underscore the significant financial strain faced by ECG, prompting stakeholders to closely monitor the company’s strategies and operational performance in the coming period. With mounting challenges in the energy sector, efforts to address financial stability and ensure long-term sustainability will be crucial for ECG’s future trajectory.
