There is a brewing tension between the Public Utilities Regulatory Commission (PURC) and the Electricity Company of Ghana (ECG) over the current financial position and allegations of mismanagement at the national power distribution company.
The rift between the regulator and the ECG emanates from what PURC describes as media reports attributing an imminent ECG bankruptcy to the regulator. But in a rejoinder to clarify their position copied to The High Street Journal, PURC emphasized that the potential bankruptcy of the company did not originate from them but rather ECG itself.
According to PURC, an ECG letter to 26th August 2024 on the request for a buffer period for cash build-up addressed to the Minister of Finance admitted that the current situation of the company if not urgently addressed will lead to serious sustainability problems.
“This situation if not addressed promptly could lead to severe financial instability and potential bankruptcy for ECG,” PURC quoted the purported ECG letter.
The Commission further revealed that following the claims of bankruptcy by ECG, attempts by the regulator to get the full details of the financial position of the company have not been complied with by the power distribution company.
The rejoinder signed by the Commissioners revealed that “To date, ECG is yet to submit the detailed financial and operational data required and demanded by PURC to substantiate ECG’s claims of bankruptcy.”
Moreover, the Commission also took exception to what it describes as an attack on the entire leadership of PURC, particularly the Executive Secretary by the ECG following the regulator’s confidential advice to the Minister aimed at salvaging the situation.
PURC further slammed ECG for overstepping its mandate of power distribution by engaging in fuel procurement leading to additional financial strain. According to PURC, ECG’s engagement in this activity, despite earlier directives from the Economic Management Team to avoid fuel procurement has contributed to the current financial distress of the company.
The Commission stressed that the core business of ECG should remain on efficient electricity distribution, which is currently underperforming.
“The Commission holds the opinion that ECG should concentrate on its core mandate of electricity 3 distribution business which currently remains inefficient, and not on ancillary businesses of procuring fuel for power generation, which is not a distribution activity.”
Moreover, PURC expressed concern over ECG’s failure to comply with the Cash Waterfall Mechanism (CWM), a financial model designed to ensure transparent revenue allocation across the electricity value chain.
Despite directives from the President, ECG reportedly did not meet its payment obligations under the CWM model, failing to make adequate payments to several stakeholders in the energy sector between August 2023 and February 2024.
Amidst the current strained relationship between the regulator and the ECG, PURC is assuring the public that it will continue to concentrate on its core mandate of balancing the interests of consumers and utility service providers while at the same time collaborating with all relevant stakeholders to ensure the sustainability of the energy sector.
