GWCL owes ECG over GH₵500m in unpaid bills
The Ghana Water Company Limited (GWCL) is currently facing a significant debt of over GH₵500 million to the Electricity Company of Ghana (ECG), making it the largest debtor to the ECG. Additionally, GWCL customers owe over GH₵800 million in unpaid bills, putting further financial strain on the company.
In response to this challenge, the ECG has launched a nationwide revenue mobilisation exercise to recover all unpaid bills, which has yielded GH₵2.5 billion so far out of the over GH₵5.7 billion debt customers owe. The exercise, which began on March 20, 2023, and will end on April 20, 2023, targets domestic users, businesses, organisations, ministries, departments and state agencies for power already consumed. This move comes as part of the ECG’s ongoing efforts to curb revenue losses and improve its financial standing.
Despite these efforts, the financial strain on the GWCL is likely to continue as customers owe the company over GH₵800 million in unpaid bills. This is a worrying development for the company, as it will impact its ability to meet its financial obligations and invest in necessary infrastructure improvements. It also raises concerns about the financial viability of the company in the long term.
The ECG has established a 4.5 million customer base with prepaid and postpaid at 50% each. Mr Samuel Dubik Mahama, Managing Director of ECG, has announced that the Company will not relent until the debt is fully recovered. He is optimistic that if all consumers pay their bills, ECG will be worth GH₵2 billion a month company.
To address the revenue losses, Mr Mahama implemented end-to-end digitalisation which has increased revenue significantly. Bulk vendors increased from 400 to over 1,000, leading to revenue increase. Additionally, revenue from quota vending rose from GH₵4.6 million to GH₵13 million a day, which translates into a monthly increase from GH₵100 million a month to over GH₵200 million a month.
However, the financial challenges faced by the GWCL are not solely due to unpaid bills by customers. The company has been struggling with financial sustainability for some time, with revenue losses and high debt levels being major issues. As of the time Mr Mahama assumed office, the company was making about GH₵125 million a month and recording over 100% revenue losses.
These financial challenges have led to concerns about the long-term viability of the company and its ability to meet the growing demand for water services in Ghana. It is therefore essential that the GWCL takes steps to address its financial challenges, including implementing cost-cutting measures, exploring new revenue streams, and improving its debt management practices.
Furthermore, the ECG’s announcement that it is considering GH₵1.2 billion tax offset using the debts of some state institutions to clear tax obligation owed Ghana Revenue Authority (GRA) highlights the complex nature of the financial challenges facing the energy sector in Ghana. While such measures may provide some temporary relief, they do not address the underlying issues that have led to the current financial challenges.
The ongoing financial challenges faced by the GWCL highlight the need for urgent action to address the company’s financial sustainability. While the ECG’s revenue mobilisation exercise is a step in the right direction, more needs to be done to improve the financial standing of the company and ensure that it can meet the growing demand for water services in Ghana.
