Former ECG MD Samuel Dubik Mahama: “The Problem is Financial, Not Just Utility-Related”

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ECG
ECG

Samuel Dubik Mahama, the former Managing Director of the Electricity Company of Ghana (ECG), has pointed to the company’s financial challenges, asserting that the core issue is financial rather than operational.

Speaking during an appearance on the Agenda show on Accra-based TV3, Mahama explained that ECG faces substantial losses due to its reliance on foreign exchange, a problem he argued cannot be attributed solely to the utility’s management.

He emphasized the disparity between the currency used to purchase electricity—dollars—and the currency in which it is sold—Ghanaian cedis. “The electricity is bought in dollars and sold in cedis, and that makes it very difficult for ECG,” he said, highlighting the financial strain caused by fluctuations in the exchange rate. Mahama pointed out that such challenges are often overlooked when discussing ECG’s financial difficulties.

Drawing attention to the broader financial context, Mahama stated that the issue of under-recoveries—when the money collected for electricity sales doesn’t cover the full cost of procurement—has to be addressed from the top, especially with regards to power purchase agreements (PPAs). “The problem is totally financial,” he said, underlining that the forex situation exacerbates the losses and under-recoveries. “Even if ECG collects 100% of its revenue, it would still be in a hole,” he added.

He elaborated further, explaining that while ECG’s revenue has grown significantly over the past few years—from 450 million cedis to 1.3 billion cedis monthly during his tenure—the issue of fluctuating exchange rates has consistently undermined the company’s ability to cover costs. “The forex situation changes, and whenever the forex situation changes, it results in under-recoveries,” he remarked.

Mahama’s analysis of ECG’s financial woes went beyond the revenue collection process, citing issues such as unfunctional meters, a need for system improvements at the distribution level, and the ongoing costs associated with PPAs. Yet, he emphasized that the fundamental problem lies in the business model itself, which, he argued, is flawed and needs a holistic approach to address the underlying financial stress.

“ECG’s forex loss alone in 2022 was 8.5 billion cedis,” Mahama stated, noting that such a massive loss is unsustainable for any company. “There is no company that can survive such a loss,” he concluded, making a strong case for a systemic overhaul of the power sector’s financial structure.

His comments highlight the complexities of ECG’s financial struggles, urging a broader and more comprehensive view of the issues at hand rather than placing blame solely on the utility itself. With an emphasis on finding solutions that take into account both the internal and external factors affecting ECG’s operations, Mahama’s remarks signal the need for a serious reevaluation of how the country manages its energy sector.

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