PURC Warns ECG Nearing Bankruptcy, Urges Immediate Government Intervention

The Public Utilities Regulatory Commission (PURC) has warned that the Electricity Company of Ghana (ECG) is on the brink of bankruptcy due to severe financial difficulties. In a letter addressed to the Presidency and the Ministers of Energy and Finance, PURC Executive Secretary, Dr. Ismael Ackah, highlighted that ECG’s struggles are affecting the entire power sector, including the Volta River Authority (VRA), Ghana Grid Company (GRIDCo), and the Bui Power Authority.

Despite efforts to improve revenue collection through digitalization, metering, and tariff hikes of over 75% since September 2022, ECG’s financial condition continues to worsen. Dr. Ackah noted that salary payments are delayed, and administrative expenses are hard to meet, indicating a need for immediate government intervention.

Although Vice President Dr. Mahamudu Bawumia and other officials have touted ECG’s revenue growth, citing increased collections from GH¢400 million to GH¢1 billion due to digital payment systems, the company still faces significant shortfalls. ECG reported revenues of GH¢884.2 million in June and GH¢857 million in July 2024, which were insufficient to cover its monthly $47 million WAPCo bill. In August, revenues dropped below GH¢800 million, covering just 42% of what was required to pay sector stakeholders. PURC also reported that ECG owes GH¢860 million to independent power producers under the Cash Waterfall Mechanism.

Immediate financial intervention is necessary to prevent further deterioration of ECG and the broader energy sector.