By: Karen Aryeetey
The Institute for Energy Security, IES has called for greater efficiency and financial discipline among state-owned enterprises, SOEs in the energy sector, particularly the Electricity Company of Ghana, ECG.
Reacting to the 2024 State Ownership Report by the State Interests and Governance Authority, SIGA, Research and Policy Analyst at IES, Derrick Xatse, urged ECG to reduce its system losses and ensure the payment of cost-effective tariffs, stressing that the company’s financial performance continues to be unsatisfactory as a result of the challenges.
Mr. Xatse said ” for the liabilities, ECG must try to be more efficient in terms of revenue collection and look at how they can reduce their system losses. Over the years, ECG has not been able to pay their cost reflective tariffs and so that has significantly affected the books of ECG negatively”.
He however, commended ECG for its recent efforts to comply with the Cash Waterfall Mechanism, a framework designed to guarantee the equitable distribution of revenue across the power sector.
”This report being discussed is for the year 2024 but for 2025, you can see that ECG has put in place a lot of mechanisms to help improve their revenue collection. Looking at the company’s report, they have been able to comply with the cash waterfall mechanism from March to June. It means ECG is doing something right to help increase their revenue mobilization. If these measures are maintained, liabilities of 70 billion Cedis for the year 2024 will be a thing of the past”, he added.
On profit-making energy SOEs, Mr. Xatse said, “there is a need to assess whether their operations and profit utilization are aligned with their core mandates and long-term objectives as some of these companies divert their profits into corporate social responsibility projects”.
The 2024 State Ownership Report by the State Interests and Governance Authority, SIGA showed that the Electricity Company of Ghana, ECG, is a major fiscal burden, holding liabilities of 71 billion cedis.
While the energy sector State-owned enterprises saw a 38.98 percent increase in revenue, high finance costs wiped out profits.
The report, however, pointed to consistent profit makers such as the Bui Power Authority, Ghana Gas, and the Bulk Energy Storage and Transportation Company, which have remained profitable over the past five years.
