The African Center for Energy Policy (ACEP), an energy think tank, has raised concerns in its July 2023 publication.

It questions the transparency of the GHS 3.1 billion collected by the Electricity Company of Ghana (ECG).

ACEP cited the Cash Waterfall Mechanism (CWM) reports to challenge ECG's financial management accountability.

ECG reported GHS 1.1 billion in total revenue between March and April, averaging GHS 550 million per month.

However, this amount represents only about 35% of the claimed GHS 3.1 billion.

ACEP's report also reveals that over 50% of the reported revenue, around GHS 540 million, was spent at ECG's discretion.

Additionally, the remaining GHS 1.1 billion accounts for only about 11% of the revenue requirement for the sector under the CWM during March and April 2023.

Regarding the usage of GHS 540 million for liquid fuel procurement, ECG claims it was necessary due to gas supply shortfalls but refuses to pay the gas suppliers through GNPC.

Consequently, this non-payment leads to repercussions such as reduced reverse flow gas volumes by WAPCO and curtailed gas supply from July 1, 2023, due to outstanding payments.

ACEP's report also sheds light on the outstanding gas supply payments from the Sankofa Gye Nyame (SGN) field, which amount to nearly $600 million. The report indicates arrears of about $380 million for LC drawdowns and additional invoices of around $207 million.

ACEP questions ECG's priorities, especially when the government has already paid over $1 billion for gas consumed by the power sector since 2018.

“The government has already paid more than $1 billion for gas consumed by the power sector since 2018, though captured in the tariff. Thus, for ECG to ignore all the realities and pay for liquid fuel while undermining gas supply, it is not difficult to conclude that the company does not care about the fiscal damage it causes to the public.”

ACEP's report highlights a striking disparity in ECG's revenue allocation based on the Cash Waterfall Mechanism (CWM). As per the CWM formula, ECG should have received approximately GHS 113.5 million, accounting for 26.37% of the reported revenue of around GHS 430 million during March and April.

However, ECG allocated around GHS 256 million to itself, deviating significantly from the prescribed allocation formula. ACEP's report emphasizes this discrepancy, stating, "ECG disproportionately assigned a significant portion of its revenue under the Cash Waterfall Mechanism (CWM) to itself while substantially underpaying other entities within the value chain."

The report also reveals a stark contrast in payment percentages between ECG and other entities involved in the value chain. While ECG disbursed approximately 78.4% of its billed invoices for March and April, it only paid between 3.1% and 12.4% of the invoices billed by other entities.

ACEP’s report states, “The GHS 256 million ECG encumbered is about 78.4% of its billed invoices for March and April. On the contrary, ECG paid between 3.1% and 12.4% of the invoices billed by other entities within the value chain.”

ACEP's conclusion asserts that ECG's actions not only disrupt the equilibrium of the energy sector but also jeopardize the financial stability of the country.

The report strongly emphasizes the necessity for a comprehensive investigation into ECG's financial practices and the whereabouts of the GHS 3.1 billion collected.

ACEP urgently calls upon the government to take immediate action in order to restore trust and confidence in the energy sector.

The report underscores the significance of transparent revenue collection, effective financial governance, and stringent accountability measures to guarantee a sustainable and dependable power supply for Ghana.