The Electricity Company of Ghana (ECG), the southern power distribution company, is facing criticism for its inefficiencies, which is draining the country’s economy.
As the largest distribution company in Ghana, ECG supplies electricity to six political regions in southern Ghana, covering around 80% of the population.
The company’s struggles have caught the attention of Ghana’s new Finance Minister, Dr. Cassiel Ato Baah Forson, who has warned of dire consequences if drastic reforms are not implemented.
Speaking at the opening of a two-day National Economic Dialogue at the Accra International Conference Centre (AICC), Dr Forson revealed that ECG had been inefficient in its revenue collection, stating that power utility company collects only 62% of the total electricity it distributes, meaning nearly 40% of power supplied is either lost, or it goes unpaid for.
This alarming revenue gap has forced the government to continuously bail out the company, with budget transfers totalling $2.1 billion over the past two years.
“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,” he stated.
According to the Finance Minister, despite the government’s intervention, ECG’s financial problems are worsening.
By 2026, the projected cumulative shortfall in the energy sector is expected to exceed $9 billion, making it one of the biggest threats to Ghana’s economic stability.
“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,” Dr Forson stated.
Dr Forson acknowledged that while tariffs do not reflect the true cost of electricity, simply increasing prices is not a solution.
“Consumers cannot be forced to pay higher tariffs to cover ECG’s inefficiencies. Instead, we must address the root causes—inefficient billing, high system losses, and poor financial management,” he explained.
Despite periodic tariff adjustments, ECG continues to struggle with financial sustainability, making it increasingly reliant on government bailouts.
Dr. Forson called for urgent and radical reforms to fix ECG’s structural problems and reduce its burden on public finances.
He proposed a number of reforms including strengthening revenue collection by implementing strict enforcement measures to recover debts from consumers, including government agencies; reducing technical and commercial losses by investing in modern metering systems and anti-theft technology to prevent illegal connections; privatization or partnership with the private sector; implementing cost-cutting measures; and
enhancing financial accountability – Strengthening oversight and internal controls to prevent financial mismanagement.
Dr Forson did not mince words about the urgency of the situation. “If we do not act now, ECG will cripple Ghana’s economy. We cannot continue pouring billions into a broken system,” he warned.
The Finance Minister urged all stakeholders, including government agencies, private sector players, and ECG management to commit to a turnaround plan that ensures the long-term sustainability of the electricity sector.
Source: https://energynewsafrica.com
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