The Public Utilities Regulatory Commission (PURC) has issued a warning that the Electricity Company of Ghana (ECG) may be on the brink of bankruptcy due to significant financial difficulties.
In a letter addressed to the Presidency, the Energy and Finance Ministers, and other key stakeholders, PURC’s Executive Secretary, Dr. Ismael Ackah, highlighted the crisis affecting not only ECG but also the Volta River Authority (VRA), Ghana Grid Company (GRIDCo), and the Bui Power Authority.
Dr. Ackah noted that these challenges have resulted in delays in salary payments and difficulties in covering administrative costs, emphasizing the urgency for immediate action. Despite efforts to enhance cash collection through digital and metering programs and substantial tariff increases exceeding 75% since September 2022, ECG’s financial instability continues.
The shortfall has left Tier B companies, including Ghana Gas, VRA, GRIDCo, ECG, Bui, and the regulators, struggling to manage staff and administrative expenses. Dr. Ackah stressed that these challenges require deeper introspection and structural changes beyond mere tariff adjustments.
PURC recommends that the Ministry of Energy, together with ECG, the State Interests and Governance Authority (SIGA), the Ministry of Finance, the Ministry of Public Enterprises, and other key stakeholders, conduct a comprehensive examination of the root causes of ECG’s financial difficulties. This evaluation should aim to transform ECG and protect the energy sector.
The Commission also calls for greater transparency from ECG regarding key issues, such as revenue collection versus Cash Waterfall Mechanism (CWM) declarations, major contracts, monthly commitments, commercial and technical losses, and non-core activities that hinder financial sustainability.
Furthermore, the Commission emphasizes that privatization should be considered a viable option to ensure the long-term financial stability of ECG and the overall health of Ghana’s energy sector.
