The Public Utility Regulatory Commission (PURC) has raised concerns over the financial situation of the Electricity Company of Ghana (ECG).

In a letter addressed to the Ministry of Energy, the PURC warned of dire challenges to the sustainability of the energy sector and the security of electricity supply if the issue of ECG's financial instability is not duly and promptly addressed. "The Commission has noted the persistent financial challenges facing the Electricity Company of Ghana (ECG).

a matter of grave concern not only for ECG but for the entire energy sector.

These challenges as contained in the letters submitted by ECG, highlighting the imminent risk of bankruptcy," the utility regulatory body wrote in a letter to the Ministry of Energy dated September 16 and reported by 3news.com.

According to the PURC, ECG's efforts to generate enough revenue by increasing tariffs by more than 75% since September 2022 have not yielded positive results, causing their financial challenges to persist.

The PURC noted that, "Given ECG's strategic role in the power distribution, its financial instability poses a significant threat to the sustainability of the sector and the security of electricity supply which could lead to a national security threat.

The Commission acknowledges that ECG has initiated and started the implementation of digital and metering programmes expected to improve its cash collection. "However, despite these efforts and the Commission's decision to increase tariffs by more than 75% since September 2022.

ECG's financial difficulties persist.

Indeed, for June and July, 2024 ECG declared GHS 884,200.000.00 and GHS 857.000.000.00 respectively.

These amounts were not enough to pay the Tier A plus WAPCo's bill of $47 million per month." The letter, signed by the Executive Director of the PURC, Dr.

Ishmael Ackah, noted that the inability of ECG to stabilize its cash collection flow has resulted in its failure to pay debts to power suppliers. "Unfortunately, in August, 2024 ECG declared less than GHS 800 million.

This represents about 42% of the revenue expected by the Commission to be collected and pay to the sector players.

The Tier B companies.

including Ghana Gas.

VRA, GRIDCo, ECG, Bui and the regulators are struggling to get enough to pay staff and administrative cost.

This situation underscores the need for deeper introspection and structural changes beyond tariff adjustments. "In view of the above, the Commission recommends that the Ministry of Energy, in collaboration with ECG, the State Interests and Governance Authority (SIGA), the Ministry of Finance, the Ministry of Public Enterprises and other key stakeholders, engage in a comprehensive examination of the root causes of ECG's financial difficulties.

Such an exercise should aim to chart a path for transforming the company and safeguarding the energy sector," the PURC suggested.

MAG/AE