The Electricity Company of Ghana (ECG) is requesting a tariff hike to cover foreign exchange (forex) losses incurred by the company. ECG argues that this adjustment is necessary to manage the increasing debt within the country's energy sector. The power distributor has appealed to the Public Utilities Regulatory Commission (PURC) to incorporate a line item for forex losses in the total revenue requirement it approves.

0

ECG cites forex losses as a substantial financial challenge that needs to be addressed, according to 3News.com.“Forex losses have become material financial losses to ECG. The position of ECG is that the issue of forex losses has not been consistently addressed by the PURC, by including it in tariffs approved by the Commission for ECG.

1

It is the view of ECG that, a permanent solution to resolving the issue of forex losses is implemented in the form of introduction of a line item for forex losses in the total revenue requirement approved for ECG by the Commission,” the Managing Director of the Electricity Company of Ghana, Mr Samuel Dubik Mahama wrote in a letter addressed to the Executive Secretary of the PURC dated March 27, 2024.

2

He said, “This way, the issue of debt accumulation in the sector especially from ECG’s end, would be eliminated.”The letter was a response to a directive from the PURC instructing it to allocate all tariff revenues as prescribed and allocated under the Cash Waterfall Mechanism (CWM) to ensure the financial stability of the sector.

3

 Loan Repayment for Bui Power Authority and Ghana National Gas Company LimitedTo recall, loans were contracted by Bui Power Authority and Ghana National Gas Company Limited to address pressing financial challenges both companies were facing. By an agreement between ECG and the two Institutions, these loans were novated to ECG for payment of both Principal and Interest as and when due.

4

The total amount contracted by the two Institutions is GHS250 million (Bui Power Authority GHS150million and Ghana Gas Ghana Limited GHS100million respectively.Mr Mahama further explained that, “In executing the terms of the loan agreement, ECG has since been making payments as and when due, which fact can be verified from the beneficiaries.

5

It is therefore prudent to address the issue of the repayment of the loan as part of the CWM payments so as to avoid placing ECG in a precarious financial position, failure to address these issues is very much likely to result in accumulation of debt, since ECG has no other source of revenue generation to pay both the principal and the interest.”

6