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World Bank aids Ghana’s power utility’s recovery bid

By Dasmani Laary
Posted on Tuesday, 5 May 2015 15:05

Electricity Company of Ghana (ECG) has been struggling to recover from massive losses and this has resulted in poor energy supplies in the country.

According an International Finance Corporation report released in 2014 ECG loses about $350 million in revenue every year.

This shortage of power is also curtailing economic growth and adversely affecting the profitability and sustainability of businesses

The report said on aggregate, technical, commercial and collection losses were around 35 percent.

It is expected that the loan would enhance the company’s financial performance, minimise commercial losses, and ultimately contribute to increased revenue and cash flow.

The credit facility provides additional financing to the Ghana Energy Development and Access Project originally approved by the bank in July 2007.

This included $90 million and an additional $70 million approved in 2010.

The projects have broadly supported sector and institutional development, electricity distribution improvement, electricity access and renewable energy, expanded capacity for electricity distribution improvement, revenue collection improvement and management and planning enhancement.

The new financing would largely be used to increase the scope and impact of on-going activities to strengthen ECG’s billing and metering systems to improve its operational efficiency, the World Bank said in statement.

Ghana is experiencing a significant shortage of electricity.

Analysts say improving the ECG’s performance could help create better conditions for attracting private financing to generate more electricity.

“This shortage of power is also curtailing economic growth and adversely affecting the profitability and sustainability of businesses,” the World Bank said.

Despite continued efforts in reducing operational losses and cost-reflective tariffs, ECG’s revenue collection performance has declined while its costs have increased sharply.

The long-standing issue of public bodies not paying for their electricity continues to burden the sector without any reimbursements of the uncollected revenues from the government.

This forced ECG to cut power to government institutions and agencies owing it millions of cedis.

World Bank country director Yusupha Crookes expressed confidence the loan would make ECG more viable.

“We are happy to be providing additional resources to support Ghana’s energy sector and it is our hope that ECG would use these resources to build much needed operational capacity, fix the bottlenecks hindering its smooth operations and financial stability, and deliver reliable and sustainable services to its customers.” Crookes said.

ECG needs to invest about US$200 million annually over the next decade to keep up with rapidly growing power demand and improve service delivery.

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