ECG Reports GH¢10.21 Billion Loss Amid Currency Volatility and Operational Challenges
The Electricity Company of Ghana (ECG) has disclosed a substantial loss of GH¢10.21 billion for the fiscal year 2022, marking a dramatic increase from the GH¢1.91 billion loss recorded in 2021.
This surge, exceeding 433%, is primarily attributed to exchange rate losses caused by the cedi’s depreciation and heightened costs of power distribution.
Operational and Consumer Impact
The financial downturn comes amid widespread consumer grievances over intermittent power supply, which has led to extended periods of darkness and significant disruptions to daily activities.
These issues were detailed in the latest Auditor General’s Report on public boards, corporations, and other statutory institutions.
Revenue Growth Amidst Rising Costs
Despite the losses, ECG reported a 24.1% increase in income, rising from GH¢12.10 billion in 2021 to GH¢15.03 billion in 2022.
This growth was driven largely by increased internally generated funds and government grants, the latter being payments made to power producers on behalf of ECG.
Escalating Expenditures
ECG’s total expenditure surged by 80%, reaching GH¢25.23 billion in 2022 compared to GH¢14.02 billion in the previous year.
This increase was mainly due to higher direct costs associated with power purchase and transmission, coupled with significant foreign exchange losses.
Changes in Assets and Liabilities
Non-current assets of ECG increased by 45.6% to GH¢32.71 billion in 2022 from GH¢22.46 billion in 2021, driven by revaluation and additional procurement of property, plant, and equipment.
Current assets of the power company grew by 23.1%, rising to GH¢10.14 billion in 2022 from GH¢8.24 billion in 2021, primarily due to an increase in trade and other receivables.
Additionally, total liabilities of the company swelled by 66.3%, reaching GH¢29.43 billion in 2022 from GH¢17.69 billion in 2021, largely due to an increase in trade and other payables. Non-current liabilities also rose by 16.4%, totaling GH¢6.37 billion in 2022.
Deteriorating Financial Ratios
The Auditor General’s Report highlighted a decline in ECG’s current ratio to 0.3:1 in 2022 from 0.5:1 in 2021, indicating the company’s continued struggle to meet short-term financial obligations.
Compliance with Financial Management Regulations
The report emphasized the need for ECG to adhere to Section 52 of the Public Financial Management Act, 2016 (Act 921), which mandates the establishment of proper control systems for asset management to prevent theft, loss, wastage, and misuse.
The severe financial losses and operational challenges underscore the necessity for strategic interventions to stabilize ECG’s financial health and enhance service delivery.
