Dr. Cassiel Ato Forson
Source: Africa Publicity
The Electricity Company of Ghana (ECG) is facing a severe financial crisis, with the company struggling to collect revenue and plagued by inefficiencies and revenue losses. According to Finance Minister Dr. Cassiel Ato Forson, ECG’s operations are unsustainable, and if urgent reforms are not implemented, the country’s energy sector could collapse under mounting debts.
The alarming revenue gap has forced the government to continuously bail out the company, with budget transfers totaling $2.1 billion over the past two years. Dr. Forson revealed that ECG collects only 62% of the total electricity it distributes, meaning nearly 40% of power supplied is either lost or goes unpaid for.
Dr. Forson stated, “The inefficiencies at ECG are costing the nation heavily. Government transfers to support the energy sector have reached unsustainable levels, yet the company continues to struggle with revenue collection and operational inefficiencies”.
The key challenges facing ECG include:
– *High Distribution Losses*: A significant portion of power supplied is either lost due to technical faults or stolen through illegal connections.
– *Non-Payment of Bills*: ECG struggles to collect revenue from both government institutions and private consumers, leading to huge outstanding debts.
– *Poor Cash Management*: ECG often fails to settle its obligations to power producers, creating a chain reaction of debt across the energy sector.
Dr. Forson emphasized, “The power sector should be a key driver of industrial growth, but instead, it has become a financial black hole, dragging the entire economy down”.
To address the crisis, Dr. Forson proposed several solutions, including:
1. *Strengthening Revenue Collection*: Implementing strict enforcement measures to recover debts from consumers, including government agencies.
2. *Reducing Technical and Commercial Losses*: Investing in modern metering systems and anti-theft technology to prevent illegal connections.
3. *Privatization or Partnership with the Private Sector*: Exploring options to bring in private management expertise to improve efficiency.
4. *Implementing Cost-Cutting Measures*: Cutting down on operational waste and ensuring ECG operates within its revenue limits.
5. *Enhancing Financial Accountability*: Strengthening oversight and internal controls to prevent financial mismanagement.
Dr. Forson warned, “If we do not act now, ECG will cripple Ghana’s economy. We cannot continue pouring billions into a broken system”.
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