The Auditor-General’s report has revealed that the Electricity Company of Ghana (ECG) experienced significant financial losses totalling over GHC6 billion in the first nine months of 2023.

These losses encompass system, technical, commercial, and collection losses, highlighting the pressing need for reforms within the company.

According to the Energy Ministry's report cited by the Auditor-General, ECG faced collection losses amounting to GHC2.05 billion from January to September 2023. This figure represents an improvement compared to the GHC2.45 billion recorded for the entire year of 2022.

System losses for ECG soared to GHC4.04 billion by September 2023, a substantial increase from the GHC2.6 billion reported in 2022. Breaking these losses down, technical losses were GHC1.3 billion, which is a decrease from the previous year's GHC2.8 billion. However, commercial losses escalated to GHC2.8 billion, up from GHC1.9 billion in 2022.

The Auditor-General’s office has recommended several measures to address these issues. These include strict compliance with the Public Procurement Act (PPA), improved contract management and enforcement, enhanced monitoring of prepayment meters, recovery of detected fraud, and prosecuting customers involved in power theft to serve as a deterrent.

In response, ECG management stated they are "implementing a new monitoring regime whereby meter readers will visit both post-paid and prepayment meters." However, they cited staff inadequacy as a challenge for effective field monitoring.

The report also uncovered that between 2016 and 2021, ECG entered into 50 contracts totaling US$145 million for the procurement of 862,750 meters, bypassing the mandated competitive bidding procedures and opting for restrictive tendering methods without adequate justification. The audit indicated that ECG did not explore the possibility of obtaining meters of the same specifications at lower prices from other manufacturers.

“ECG did not take steps to explore the possibility of getting meters of the same specifications at lower prices from manufacturers other than the ones in their database,” the report states, highlighting a lack of value for money considerations.

The issue of non-compliance with the Public Procurement Act is particularly concerning. ECG’s stance, as noted in the report, suggests they believe they should not adhere to the PPA requirements since they operate as a limited liability company without government subvention.

“ECG is of the opinion that it should not adhere to the PPA requirement as it is a limited liability company that does not depend on government subvention to finance its operations,” the report states. This position was reinforced by a letter dated February 12, 2014, in which ECG sought the Energy Minister’s legal opinion on PPA adherence.

Despite seeking exemption from the Ministry of Finance and Economic Planning in July 2020, ECG proceeded with non-compliant procurement practices without official approval. The report notes: “In the absence of exemption from the Minister of Finance and Economic Planning, we expected that ECG would be guided by commercial procurement practices in Section 15 (2) of the Public Procurement Act to procure meters.”

The audit uncovered staggering losses from faulty readings, meter bypassing, and power theft. In just four regions over a five-year period, ECG detected GHC54 million (US$4.5 million) in losses, recovering only 39.3 percent of this amount. Commercial losses averaged 30 percent, well above the 21 percent target, due to insufficient monitoring.

“ECG recovered GHC21,260,166 representing 39.3 percent of the GHC53,988,463 total amount detected from fraud activities and faulty readings,” the report states.

Contract management issues further exacerbated the situation. The audit found that “ECG failed to comply with conditions of contract to terminate a contract with a manufacturer in the process of procuring the meters,” even when suppliers failed to deliver on time.

The report cited instances of customers resorting to illegal connections after waiting over a year for meter installations. One frustrated customer at the Legon District Office stated: “If I don’t get the meter today, I will be forced to connect directly to the mains until such time ECG supplies me with a meter.”