IT STINKS!! Auditor-General's Report on Electricity Companies

In 2011, the Electricity Company of Ghana (ECG) spent 64.4% of their available revenue on salaries , emoluments and other personal comforts for management and staff. This left them with a paltry 19.9% to spend on maintaining the system and offering services to the consumers. The information is contained in the Report of the Auditor-General on the Public Accounts of Ghana - Public Boards, Corporations and Other Statutory Institutions for the year ended 31 December 2011, which has just been presented to Parliament.

As if that is not enough, the management of ECG awarded themselves a whacking 35% increase in salaries and allowances for the 2013 financial year.

According to the Auditor-General's Report, ECG obtained GH¢923,617,000 as revenue from tariffs. In addition, they obtained other income to the tune of GH¢52,839,000. This made a total of GH¢976,456,000. After paying GRIDCO and Sunon Asogli (Ghana) Ltd an amount of GH¢825,977,000 for the supply of power, they were left with GH¢150,479,000. Out of that income, they spent GH¢81,940,000 on salaries, emoluments, allowances and other creature comforts for management and staff.

In 2013, a Head of Department at ECG will be earning a gross monthly salary of GH¢19,382.83, excluding allowances of GH¢5,814.83. The total of salary and allowances for the Head of Department will amount to a whopping GH¢25,197.58. The salary and allowances of the Managing Director are shrouded in secrecy. Above all, ECG managers do not pay for electricity since they receive hefty electricity allowances. With these levels of pay, they do not have to sleep in darkness like their consumers since they can afford to purchase the top-of-the-range household generators.

That is not all. Through maladministration and inefficiencies, ECG lost 26.6% of the total power purchased from GRIDCO and Sunon Asogli (Ghana) Ltd. These losses are made up of transmission losses due to a combination of factors, including non-maintenance of equipment and illegal connections to ghost premises. In monetary terms, this amounts to more than GH¢240 million. The ECG incurred the high transmission losses of 26.6% although the maximum allowable losses stipulated by the Ministry of Energy (and monitored by the Public Services Commission) should be not more than 4%.

The reality is that while the ECG management has been awarding itself, sky-high levels of pay and benefits, they continue to default in the payment of tariffs that they owe to GRIDCO and Sunon Asogli (Ghana) Ltd. At the last count, the ECG was indebted to Asogli by more than US$21 million while they owe GRIDCO more than GH¢100 million.

Having spent most of the available revenue on themselves, the ECG is asking for a 214% increase in tariffs with the excuse that Ghanaians ought to pay 'realistic prices'. It is obvious that most of the 'realistic prices', which would be paid by individual households and small businesses, would only go and feather the nests of ECG officials. It is on record that the ECG has failed to collect tariffs amounting to over GH¢640 million owed them by large foreign-owned companies such as Newmont, Chiraano Goldmines, etc. According to the Auditor-General's report of 2011, some of the arrears that the ECG has failed to collect have been outstanding since 2008.

In December 2006, when the Ghana government increased the utility tariffs by 35%, the explanation was that, it was necessary to remove subsidies which the government claimed to be paying on those services. Another reason that they give for the need for sky-high increases is 'obsolete equipment, weak transmission system that needs to be improved, etc. Every time they increase utility prices they give the same reasons. The question that the ECG needs to answer is why, they never renew the obsolete equipment with the increases of the past years.

The PURC does not appear to have taken time to look at the books of the various electricity companies to ascertain the real justification for the gargantuan increases that these companies are asking for. Any close examination of the books would reveal that the levels of increases being claimed are totally arbitrary. For example, what are the real estimates which contained in the 2013 budgets of these companies? Having said that, it is noteworthy that the ECG has not published its annual reports for more than three years while it is not known when was the last time they held an Annual General Meeting (AGM) with the shareholders.

The consumer cannot fail to notice the feeling impunity by officials of the electricity companies which propels them to be arrogant and callous towards the ordinary consumer.

On 28 Apr 2009, the Ghanaian Times reported that Mr. Jude Amankwah, then Managing Director of the ECG arrogantly stated that 'customers of the Electricity Company of Ghana (ECG) whose property and equipment get damaged through power outages cannot sue ECG in court. 'Even if they do, they can never win'. He said the ECG had not signed any contract with customers that, there would never be a problem with the power it supplied to them'. Everyone knows that most electricity outages are caused by blown transformers which have not been maintained over a long period. Yet he thinks he has to intimidate Ghanaians into thinking that the ECG is above all of us, and maybe, somehow, they do us a favour when they manage to put the lights on.

Recently the Director of Communications of the VRA claimed that Ghanaians had not had any increases in tariffs for ten years, although that was palpably false.

One of the problems that Ghanaians face as a nation is the way in which top management of the the utility companies are appointed. Appointments to these companies are based on political party patronage and not on any notion that those appointed are efficient managers. Appointments to these companies, as well as other state companies are rewards for being loyal to the ruling party. Because of that, the managers so appointed assume that they owe the general population no obligation to render a good service. They only have to be loyal to the ruling party and they would continue to be in their jobs even if that means the rest of the country have to sleep in darkness.

It is for such reasons why the VRA does not care if they are running short of light crude oil to power the thermal plants. In February this year, all the five transformers at the Aboadze plant in Takoradi broke down. That event was not due to lightening or thunder. It was due to a failure to maintain the equipment.

With the support of politicians, Ghanaians will very soon be slapped with hefty increases in tariffs and there appears to be little appetite on the part of the general population to make their voices heard. All that most are likely to do is to 'give everything to God'.

It is also a fact that the World Bank has been at the heels of the Ghana Government to increase the tariffs to astronomical levels. The reason is that foreign companies which would want to enter the Ghanaian electricity market would like to make huge profits, and it is only when the tariffs go sky-high that they would consider it worth their while to enter the market. In the next week, the World Bank will be holding talks with the Bank of Ghana, the Ministry of Finance and other NGOs and the media to find ways of persuading the people of Ghana to accept the tariff increases.

ECG ACCOUNTS AT A GLANCE

Revenue 923,617,000.00
Direct Cost -825,977,000.00
Gross Margin 97,640,000.00
Distribution Expenses -29,974,000.00
General and Administration
Expenses -81,940,000.00
Other Income 52,839,000.00
Operating Profit 38,565,000.00
Net Finance Income 12,356,000.00
Share of Profit of Association 448,000.00
Profit before Tax Expense 51,369,000.00
Tax Expense -50,220,000.00
Pofit after Tax 1,149,000.00

Source: Auditor-General Report 2011