2024 ECG Audit Uncovers GH₵5.3bn in Undeclared Revenue

A detailed audit conducted in 2024 by PricewaterhouseCoopers (PwC) has uncovered a major financial discrepancy within the Electricity Company of Ghana (ECG). The audit reveals that ECG under-declared its revenues by a staggering GH₵5.3 billion, raising serious concerns about its financial management and transparency. According to the PwC report, despite collecting a total of GH₵15.8 billion, ECG reported only GH₵10.4 billion to the regulator, indicating significant under-declaration.

The audit highlights that even though ECG substantially under-declared its revenue, it still failed to meet its payment obligations to key players in the energy sector, as per the agreed cash waterfall mechanism. This system is meant to ensure proper distribution of funds to various entities involved in the energy value chain, including power generation companies. According to the report, ECG declared GH₵10.4 billion but only paid GH₵6.5 billion, leaving a large gap of GH₵3.9 billion that was not paid to these entities.

Another concerning revelation in the audit is the financial arrangement with a third-party vendor hired by ECG to collect revenues on its behalf. This vendor received a significant GH₵402 million in commissions, a sum that is nearly as much as the payment made to the Volta River Authority (VRA), which received GH₵412 million, and far higher than the GH₵323 million paid to Bui Power. What stands out is that this vendor was paid before the power generation companies, raising questions about the prioritization of payments and the overall financial oversight.

Additionally, the audit points out ECG’s non-compliance with International Monetary Fund (IMF) requirements regarding revenue collection. As part of the IMF-backed program, ECG is mandated to operate with a single collection account. However, in 2024, ECG maintained 99 bank accounts across 19 different banks, a clear violation of this condition. Despite this, the report indicates that 78% of the company’s revenue collections were funneled into one account, but the presence of so many other accounts suggests a lack of proper financial discipline and control.

The findings of the audit raise serious questions about ECG’s financial operations, governance, and transparency. The under-declaration of GH₵5.3 billion in revenue points to potential issues with revenue reporting, which could have far-reaching implications for the company’s credibility and financial health. The significant variance in payments made to the value chain players further exacerbates these concerns, as it suggests mismanagement or improper allocation of funds that should have gone to power generation entities.

Moreover, the high commission paid to the third-party vendor further complicates the situation, indicating that financial priorities may not have been properly aligned with the needs of the energy sector. With such large sums being directed toward the vendor, the question arises as to whether these funds could have been better used to support the power generation companies, which play a critical role in the country’s electricity supply.

In light of these revelations, the audit calls for greater accountability and stricter adherence to financial regulations. ECG will need to address these discrepancies promptly to restore trust among stakeholders, including regulators, power generation companies, and the general public. The audit also highlights the importance of adhering to IMF requirements, especially in terms of simplifying financial operations and ensuring proper oversight through a single collection account.

The findings of this audit have shed light on serious issues within ECG’s financial operations, and it is imperative that the company takes immediate action to rectify these problems. Transparency, better financial management, and a commitment to fulfilling its obligations to the energy sector are essential if ECG is to regain its standing and avoid further scrutiny from regulators and the public.