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January 27, 2012 | Research Findings

ECG CARELESSNESS: The President’s Assignment Phase 4 of 5

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ECG CARELESSNESS: The President’s Assignment Phase 4 of 5

…The Story Of How Some Banks & Financial Institutions Are Reinvesting ECG's Cash, Leaving The Power Supplier Stranded & The Million Ghana Cedi Defaulters

Anas Aremeyaw Anas reports from ECG Electro-Volta House

When debts collection was becoming burdensome for the Electricity Company of Ghana a few years ego, they came out with a smart idea, banks and other financial institutions who the ECG has contracted to take payment on their behalf.

All of this was to ease the hustle of electricity bill payment and the purchase of prepaid units, banks and to some extent telecom companies have been allowed by ECG to sell power and receive payments on behalf of ECG. This move looked good on paper but bad in practice, the third parties (the banks especially) involved are taking advantage of the situation at the expense of the ECG. Some of them have refused flatly to duly transmit the monies they collect to the ECG. The effect this refusal to transmit monies to the ECG is double edged.

On one hand, the ECG is unable to get their badly needed revenue, whilst on the other hand, customers who must have paid, suffer disconnection resulting from the fact that monies paid do not usually reflected on the ECG system, and when they do, the reflect very late. We gathered on the ground that, the cause of the long delays by commercial banks in transferring customer's payment of their electricity bills to ECG was because they were busily investing ECG cash into their own businesses.

Some banks contracted by the ECG to help in their revenue collection drive, were not taking commission on the monies they took on behalf of ECG, this again we established was ostensibly to outwit competitors and get a large chunk of customers paying ECG monies to them.

EZI Savings and Loans Company who operate account Number 4003032- ECG; have been holding unto ECG cash in the Nungua District for over a year. As at August 2011, this company was holding as much as GH¢ 50,042.12 (over ¢ 500 million old cedis). When the promo of this story aired they hurriedly rushed to pay Other banks steeped in this unethical business practice, unacceptable by all standards are; Ecobank The Trust Bank, Amal Bank – now Bank of Africa, Agricultural Development Bank, United Bank for Africa, Standard Chartered Bank, Guaranteed Trust Bank, Stanbic Bank Ghana, Unibank and several others.

Revenue recipients for ECG include; Bonded Cashiers, Private Sector Collectors (PSC) and the Banks. Yet figures in our possession from the ECG Intranet points to the fact that banks have consistently posted low returns from monies that they have collected on behalf of the ECG.

'The banks are reinvesting these monies into their own businesses, contrary to the contractual agreement they have with ECG.' Kwame Tefle a banker told this reporter

The erstwhile board chairman of the ECG, Dr. Kweku Osafo, in an interview told us of some more shocking revelations on especially how rural banks were stifling the ECG financially.

Several rural banks out in the districts were unwilling to pay ECG monies into the company account. TIGER would in due course publish a full list of all banks whose defaulting status is crippling the ailing power supplier.

We staggered on a case in the Ashanti West Regional Office, as far back as August 2011. The ECG regional manager was requesting the help of the Bureau of National Investigations (BNI) to track some unauthorized money collectors.

The two agencies caught in this illicit act were; SUFFICIENCY FINANCIAL SERVICES and MERCHANT MOBILE MONEY; these entities had gone as far as issue fictitious receipts to unsuspecting customers.

Stories of many such entities abound, whiles milking the state, they deepen customer frustration in search on better services within the power delivery sector, a very critical component of the national development drive.

Here is an ECG that is in dire need of revenue and yet the banks find it prudent to hold onto these monies and by so doing inconvenience us all. For how long shall we entertain this, who is watching who?

THE WORLD BANK/GEDAP EPISODE
GEDAP stands for the Ghana Energy Development and Access Project.

This is a very large project that the World Bank and other aid donors have been working on mainly with the ECG, and other agencies within the power sector. The project has been running since 2006; and is worth some 250 million dollars. Most of that money is for system improvement in electricity distribution.

The GEDAP Project is split under two phases (GEDAP 1 and 2) GEDAP 1 was estimated to cost over US$ 171 million to be used in respect of; corporate strengthening, system upgrade, commercial and technical capacity upgrade, intensified of existing distribution networks and grid extension in six regions.

GEDAP 2 however was aimed at capacity expansion and network improvement and institutional development.

Under institutional development of GEDAP 2, US$ 27.7 million was allocated to: 'REPLACEMENT OF CREDIT METERS WITH SPLIT-TYPE PRE-PAID METERS IN ASHANTI REGION.'

Considering that the Ashanti West region of the ECG recorded the most losses as a result of collusion on the part of officials and customers, the World Bank wanted to partner ECG to reduce losses in the region on a pilot basis.

Metering has over the years been a thorny area, because supposedly, it is the conduit through which customers fleece the state of much needed revenue. Replacing old credit meters with prepaid meters was seen as the ideal panacea, and the World Bank had earmarked as much as US$ 27.7 million for that purpose under GEDAP 2.

But till date, the tender documents for the contract are yet to be floated. Simply because the last board insists that they want to look for money to fund the metering of both Ashanti regions (East and West).

The bigger problem however is that; mother Ghana is on the threshold of being blacklisted by the World Bank because the board is trying with to sole source the metering of Ashanti to a company.

GEM is the only local meter assembling plant in the country and the action of the board could at best be seen as empowering local industries and its associated creation of employment for people.

Senior management of ECG are split on the effectiveness of the meters, whiles a section see the e-cash meters as effective as far as recommending the module to other countries, another faction say it has failed to solve revenue losses and have at best worsened the plight of customers.

GEM has provided documentation from the Ghana Standards Authority (GSA) indicating that their meters are of global specifications, they further insist that their production was based on specifications given by THE ECG. Again, some people within ECG are vigorously disputing that it meets ECG specifications.

The erstwhile board's insistence to award the Ashanti West metering contract with the funds coming from an outside party (the World Bank) means the World Bank, might theoretically withdraw their monies in that respect.

Not just of the metering component of US$ 27.7 million but the whole $70 million GEDAP 2 facility as they see the Ashanti West metering as part of their integrated plan to better the lot of citizens and to assuage ECG's troubles in the region.

THE MILLION CEDIS INDUSTRIAL DEFAULTERS GANG

In phase 2 of this series, we brought to the fore the list of companies under the Special Load Tariff (SLT) bracket of ECG, who owed ECG huge monstrous debts. We were unable to bring the industrial defaulters whose overall debts stood at GH¢ 21,388,686.52 equivalent to some US$ 13,979,533.67.

Here, we shall break our silence on the million cedis industrial defaulters gang, who owe the ECG.

The industrial defaulters comprises especially the Manufacturing and Steel Companies in Tema, also in there are the Timber companies and the mining concerns, that guzzle electrical power from the ECG and fail woefully to pay for.

Chiranno Goldmines

Tema Steel Company

Western Steel Company

Ferro Fabric

Special Steel

John Bittar and Sons

Sentuo Steel Ghana Limited

Tema Steel Company

Noble Gold Bibiani

Tema Oil Refinery

TOTAL
GH¢ 5,207,828.12

GH¢ 3,014,376.70

GH¢ 3,011,792.63

GH¢ 2,536,738.73

GH¢ 2,515,228.90

GH¢ 2,436,640.23

GH¢ 1,683,840.14

GH¢ 1,583,832.70

GH¢ 1,316,365.31

GH¢ 1,192,367.00

GH¢ 21,962,271.73 equivalent US$ 14 million

The ECG is owed lots of monies by companies and individuals to the tune of GH¢ 460 million. But the major supplier of the power that we use is also indebted to other state agencies from whom they buy power.

As at the last time that we entered the ECG system, ECG also owed GH¢ 148 million cedis: the breakdown of which are as follows;

ECG owes the Volta River Authority (VRA) GH¢ 80 million, the Ghana Grid Company (GRIDCo) GH¢ 60 million and GH¢ 8 to Sunon Asogli Power Plant, all amounts in respect of power purchases.

The bigger problem however is the amount of losses that the company records in respect of distribution and commercial losses which currently stands at 29.5% each year.

As per ECG's calculations, every percentage lost translates monetarily to some GH¢ 60 million cedis. Therefore the ECG losses every year is a whooping amount of GH¢ 1,770,000,000.00. By implication, the ECG's losses even aside defaulting consumers of power is an area that management must move quickly to arrest.

One wonders what the Revenue Protection Division, Loss Control and Customer Services Directorate were doing to better the lot of the company; especially as they are supposed to ensure that the ECG improves its revenue collection.

We are aware of nefarious activities by some of ECG's disconnection officers and contract meter readers, who collect monies from customers and allow them to pile up their debts.

We are well aware of the mines and other big timber firms in the Western Region who are given preferential treat by some big men at the Electro-Volta House, a situation that has emboldened some of these companies to use electrical power and expecting that the ordinary tax payer picks up the bills at the end of the month.

We are aware of how the regional management of ECG have on several occasions been handicapped in the performance of their duties with 'orders coming from Electro-Volta House whenever they decide to tread the right and fair path.

The politics of power supply to the Tema Oil Refinery is another very spiky area that we have observed during the course of our stay at the ECG Head Office, these and many more are within TIGER's domain and the story would certainly be told someday.

In tomorrow edition, we would find out how much board members take as board fees, who takes what.

Stay tuned

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