Editorial: Procurement breaches by ECG mustn’t be entertained

The Electricity Company of Ghana Ltd. (ECG) is guilty of not adhering to the Public Procurement Act (PPA), according to an Auditor-General’s report.

ECG signed 50 contracts worth US$145million to procure 862,750 meters between 2016 and 2021 without adhering to the Public Procurement Act (PPA).

A performance audit on management of meters revealed that the utility company bypassed required competitive tendering processes, opting instead for restrictive tendering without proper justification.

The Auditor-General’s report highlights the fact that ECG did not take steps to explore the possibility of getting meters of the same specifications at lower prices from manufacturers other than the ones in their database.

This is in stark contrast to value for money considerations and must be condemned. ECG’s stance on PPA compliance is particularly concerning.

In a letter dated February 12, 2014, ECG sought the Energy Minister’s legal opinion on PPA adherence – and ECG was of the opinion it should not adhere to the PPA requirement, being a limited liability company that does not depend on government subvention to finance its operations.

Despite seeking exemption from the Ministry of Finance and Economic Planning in July 2020, ECG proceeded with non-compliant procurement practices without receiving official approval.

The report notes: “In the absence of exemption from the Minister of Finance and Economic Planning, we expected that ECG would be guided by commercial procurement practices in Section 15 (2) of the Public Procurement Act to procure meters”.

Consequently, the audit uncovered staggering losses from faulty readings, meter bypassing and power-theft. In just four regions over a five-year period, ECG detected GH¢54million                 (US$4.5million) in losses.

To date, only 39.3 percent of this amount has been recovered. Also, commercial losses averaged 30 percent – well above the 21 percent target – due to insufficient monitoring.

In addition, the audit found that “ECG failed to comply with conditions of contract to terminate a contract with a manufacturer in the process of procuring the meters”, even when suppliers failed to deliver on time.

The report also cites examples of customers resorting to illegal connections after waiting over a year for meter installations.

In the first nine months of 2023, the power distribution company recorded a total    GH¢2.05billion of collection losses according to the Energy Ministry, although this is lower than the total loss of GH¢2.45billion that the company recorded in 2022.

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