Consumers cannot be forced to pay higher tariffs to cover ECG’s inefficiencies – Ato Forson calls for reform
The Electricity Company of Ghana (ECG) is facing a severe financial crisis, posing a significant threat to the country’s economic stability. According to Finance Minister Dr. Cassiel Ato Forson, the company’s inefficiencies and revenue losses have drained billions from the national budget, making its current operational model unsustainable.
Speaking at the National Economic Dialogue, Dr. Forson highlighted the alarming state of ECG’s finances, warning that without urgent reforms, Ghana’s energy sector could face collapse due to rising debts.
He revealed that ECG collects only 62% of the electricity it distributes, meaning nearly 40% of the power supplied is either lost or remains unpaid. This shortfall has forced the government to allocate $2.1 billion in budget transfers to support the company over the past two years.
“The inefficiencies at ECG are costing the nation heavily,” Dr. Forson stated. “Government transfers to support the energy sector have reached unsustainable levels, yet the company continues to struggle with revenue collection and operational inefficiencies.”
Despite ongoing government intervention, ECG’s financial challenges continue to escalate. By 2026, the cumulative shortfall in the energy sector is projected to surpass $9 billion, making it one of the most pressing threats to Ghana’s economic health.
Dr. Forson outlined several key issues contributing to ECG’s financial distress.
•High Distribution Losses: Significant portions of electricity are lost due to technical faults or illegal connections.
•Non-Payment of Bills: ECG faces difficulty collecting payments from both government institutions and private consumers, resulting in substantial outstanding debts.
•Poor Cash Management: The company frequently struggles to meet its financial obligations to power producers, creating a ripple effect of debt across the energy sector.
He stressed that while electricity tariffs do not accurately reflect the true cost of supply, increasing prices alone will not solve the problem. “Consumers cannot be forced to pay higher tariffs to cover ECG’s inefficiencies. Instead, we must address the root causes—inefficient billing, high system losses, and poor financial management,” he asserted.
To address these challenges, Dr. Forson proposed a series of reforms aimed at restoring ECG’s financial health and reducing its reliance on government bailouts:
1. Strengthening Revenue Collection: Enforcing stricter measures to recover debts from consumers, including government agencies.
2. Reducing Technical and Commercial Losses: Investing in modern metering systems and anti-theft technology to curb illegal connections.
3. Exploring Privatization or Partnerships: Considering private sector involvement to bring in management expertise and improve operational efficiency.
4. Implementing Cost-Cutting Measures: Reducing operational waste and ensuring ECG operates within its revenue limits.
5. Enhancing Financial Oversight: Strengthening internal controls and increasing accountability to prevent mismanagement.
Dr. Forson emphasized the urgency of these reforms, warning that continued inaction could have severe consequences. “If we do not act now, ECG will cripple Ghana’s economy. We cannot continue pouring billions into a broken system,” he cautioned.
He called on all stakeholders—government agencies, private sector partners, and ECG management—to support a comprehensive turnaround plan to secure the long-term sustainability of Ghana’s electricity sector.
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