Ghana can no longer afford to repeatedly bail out the Electricity Company of Ghana (ECG), the Executive Director of the Institute for Energy Research and Policy, Kwadwo Poku, has warned.
He said continuing inefficiencies across the electricity distribution network were placing an unsustainable financial burden on taxpayers, and called for urgent reforms to improve ECG’s operations and financial position.
Speaking to 3Business on 5 August, Mr Poku said the power distributor could not continue to receive state support while recording losses across the electricity value chain.
“We should definitely bring in some level of efficiency. Let somebody invest money, and the person who invests the money should also manage the company,” he said.
His comments follow criticism from the Ghana Utility Workers Union (GUWU) over the government’s appointment of a transaction advisor to oversee private sector participation in ECG.
GUWU described the decision as an act of bad faith and argued that the process had not involved adequate consultation with stakeholders.
Mr Poku said the introduction of private capital could help improve ECG’s performance, but stressed that any arrangement would need to address the company’s operational weaknesses, including revenue leakages, metering problems and ineffective billing and collection systems.
He also urged stakeholders not to reach conclusions about the government’s preferred model before the transaction advisor had completed its work.
“We should all wait for the transaction advisor to present the report and see the direction it advises government to take,” he added.
The analyst acknowledged that ECG had benefited from significant foreign exchange gains following the appreciation of the Ghanaian cedi. However, he said those gains did not remove the company’s wider financial challenges, particularly its substantial long-term debt.
“If you look at their financial statements presented at the recent AGM, they recorded foreign exchange gains of about GH¢12 billion because when customers pay their bills they pay in cedis, and when ECG converted those funds to dollars, the stronger cedi resulted in exchange gains,” he explained.
Mr Poku added that ECG had long-term borrowings of about GH¢21 billion and should have built on what he described as improved performance in 2024.
He warned that private sector involvement alone would not guarantee a lasting solution if the utility continued to lose money through weaknesses in metering, billing and revenue collection.
“Unless you deal with those leakages, any private sector arrangement will struggle to deliver lasting improvement,” he said in substance, warning that the cost could ultimately be passed on to consumers.
The government has begun the process of introducing private sector participation in ECG as part of efforts to improve operational efficiency, strengthen revenue mobilisation and reduce financial losses in Ghana’s power sector.
ECG has faced persistent challenges for years, including high system losses, low revenue collection, rising debt and liquidity constraints. Those difficulties have affected the wider electricity value chain and contributed to repeated demands for financial support from the state.
The government’s plans have been opposed by GUWU, which says the decision to appoint the transaction advisor was taken without sufficient engagement with organised labour and other stakeholders.
Mr Poku’s intervention comes as the government awaits advice on the most appropriate structure for private sector participation. He said the central objective should be to ensure that any investor was able to bring both funding and effective management to ECG, rather than leaving taxpayers to continue financing the company’s losses.
By Coffie Mawuedem Noel
