The Electricity Company of Ghana Limited (ECG) has accused the Volta River Authority (VRA) of poaching its major customers and depriving the company of needed revenue to cover its costs.

?The current regulatory regime that deregulates the bulk electricity customer market has created an uneven field for VRA to go after the company?s major customers,? William Boateng, the Public Relations Manger of the ECG, told the B&FT in an interview.

?Some of these bulk customers who have secured licences from the Energy Commission raised objections to the structure of the June 2010 tariff and have refused to honour bills prepared over the period, claiming that they have been over-penalised through the high level of cross-subsidies imposed on them,? he said.

According to Mr. Boateng, to prevent such customers from being poached by the VRA and also to get them [bulk customers] to honour their bills, ECG is forced to renegotiate their tariff rates lower than the Public Utilities Regulatory Commission (PURC) approved rates. ?The cost to ECG from this development for the period August 2011 to date is estimated at GH?100million,? he said.

He explained that the situation invariably affects ECG?s ability to honour its financial obligations to suppliers, including VRA, since it lowers its regulated revenue to retain bulk customers.

Reacting to reports that it owed the VRA about GH?545million as at April 2013, Mr. Boateng said: ?The ECG has not at any time been indebted to the VRA to the tune of over GH?500million. Even in a letter to the ECG dated May 22, 2013 and signed by the Chief Executive Officer of the Authority requesting payment, the amount stated as owed by the ECG as at the time was about GH?271 million. This excludes receivables in favour of ECG at the Cross Debt Clearing House (CDCH) which could be paid directly to VRA, bringing the net total indebtedness lower to about GH?156million,? he said.

Reacting also to calls for the ECG to be ?split? into smaller units to ensure efficiency in power distribution, Mr. Boateng said that was far from the case and the ECG in its current state has already been broken down into smaller units to ensure efficiency.

From ECG?s financial records, its indebtedness to the VRA for electricity purchased in 2010 was GH?104.445million; GH?104.445million in 2011; and GH?290.91million in 2012. During the same period, ECG?s receivables — primarily emanating from power purchased from VRA and sold to MDAs and the Ghana Water Company at the CDCH — which was paid to reduce the ECG?s indebtedness was GH?2.037million in 2010; GH?122.761million in 2011; and GH?115.738million in 2012.

The ECG has already been broken down into 10 units with Regional Directors, who are given a set target, and District Managers who report to the Regional Directors. The Regional Directors then in turn report to the head office, said Mr. Boateng.
?Accra East and West; Tema, Volta, Eastern, Central, Western; Ashanti East and West are the various units that we have.?

The ECG says its needs US$200million of investment every year to expand its operations to match a similar input in power generation expansion by the VRA. However, it is only able to raise about (US$15million) GH?30million internally.

Mr. Boateng said the power distributor?s commercial and technical losses dropped from 27.5 percent in 2011 to 21.8 percent in 2012.

The ECG, VRA and the Ghana Water Company have tabled proposals for an increase in its current tariff of 27 pesewas per kilowatt hour.

The Public Utilities Regulatory Commission (PURC) has indicated that it will undertake a major tariff review in response to the utilities? proposals.

By Dominick ANDOH

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