The Northern Electricity Distribution Company (NEDCo) is on a collision course with St Anne’s Hospital in Damongo, which is more than 630km (390 miles) by road from the capital, Accra, over a debt of more than $370,000.
The NEDCo task force was ruthless and merciless by taking the community health facility off the national grid, leading to the death of two babies who were on blood transfusion, medical experts say.
“That was a cruel act and came as a shock to us because this is a health facility, regardless of the arrears we need to settle,” Dr Gbeadese Ahmed of St. Anne’s Hospital tells The Africa Report. “You cannot replace life, but we can always have a way to clear this debt.”
The development led to a total shutdown of the hospital – managed by the government – for some days, affecting healthcare delivery in the deprived community. It took the intervention of the local MP, who doubles as a cabinet minister, Samuel Abdulai Jinapor, after paying off part of the hospital’s debt to get NEDCo to restore power.
If we don’t get tough, we’ll end up folding up and that will affect everybody because there will be no power.
“This is so unfortunate,” said Saeed Muhazu Jibril, the Savannah regional minister. “I have met with both parties because cutting power to the entire hospital was not part of the plan. We’ve made some payments, although NEDCo says it’s not enough. We will continue to discuss.”
NEDCo’s debt situation
Electricity consumers owe NEDCo, a subsidiary of the Volta River Authority (VRA), over $111,082,168 (GH¢1.2bn) as of January 2023. The power distributor said it owes its parent company and power generator (VRA) $148,109 for power purchased.
NEDCo, which is in charge of distributing power in the northern parts of the West African country, said it spends $11.1m every month to light up its operational areas. However, only $7.8m returns to the distributor monthly due to power theft, poor management and non-payment by consumers.
At least 321 customers were arrested for illegal connections in the Upper East Region alone in a May operation.
“The debt situation looks quite dire for us as a business,” Osmani Aludiba Ayuba, managing director, NEDCo says. “We gave our customers demand notices. I am sure if there was any willingness to pay, they would have done that by now.”
“Our business is being threatened. We don’t discriminate. Once you owe us, we take you through the same process as the others. If we don’t get tough, we’ll end up folding up and that will affect everybody because there will be no power,” he says.
NEDCo is not only owing its parent company, it is also indebted to state-owned power transmitter, Ghana Grid Company (GRIDCo), to the tune of $4.4m.
Ghana has two main power distribution companies – NEDCo and the Electricity Company of Ghana (ECG) – who are both struggling to retrieve debt sitting in their books. In March, ECG went after its customers, including Parliament House and state-owned enterprises, owing a cumulative amount of $478.7m (GHC5.7bn).
Power theft leakages
A publication in the International Journal of Science and Business (IJSAB) said Ghanaian power officials often conspire with customers to milk utility companies.
“It was also observed that sometimes some corrupt NEDCo officials become negligent and channel power theft charges into their own pockets and allow some culprits to go scot-free. A fruitful eradication of these power theft leakages will lead to a prominent laid down electricity supply system in the NEDCo operational areas,” said the report titled ‘Power theft practices in Ghana: Key perspective indicators undermining the revenue mobilisation on NEDCo’ published in September last year.
“This will churn into retrieving of sustainable funds for the active operation of the firm including the refurbishment of obsolete transmission and circulation equipment to help advance on the technical losses,” it added.
Economist Edwin Dodoo believes Ghana’s current economic and financial crisis – the worst in decades – is a true reflection of the financial challenges confronting the power distribution companies. The West African country is on a three-year $3bn IMF relief programme to support the country’s economic recovery.
“Don’t forget the government is already burdened with some $2.8bn legacy debt in the energy sector. The wage bill is already huge, so it becomes difficult for the state to make payment of electricity bills for some of these smaller entities a priority,” Dodoo says.
“The government must wean itself from managing some of these enterprises and hospitals so they can use internally generated funds to take care of their bills,” he adds.
If this is how things will go then more lives are likely to be lost, especially at the hospitals. They need to execute this exercise with a human face because human life is more important than money.
Maxwell Kotoka, the corporate affairs manager of NEDCo, said the energy firm is in a state of near collapse because the huge monthly losses are making it difficult for the company to replace obsolete equipment and undertake major repair and maintenance work in order to improve service delivery.
“We are grappling with revenue leakages as a result of illegal connections among others,” Kotoka says. “We also owe our partners and if our customers do not honour their side of the bargain, how do we stay afloat?”
Switch to prepaid
Adam Yakubu, research and policy analyst at the Institute of Energy Security (IES), says the government must ensure all state-run or owned institutions are placed on the prepaid metering system to ensure efficiency in the system. “This way we can ensure prompt payment to avoid unpleasant situations like what happened at St Anne’s Hospital,” he says.
NEDCo was not charitable to other defaulters such as the Bagabaga College of Education, Tamale College of Education, Aliu Mahama Sports Stadium and the Tamale Technical University. After its major revenue mobilisation drive in April, it said it was able to recover over $740,000.
In spite of the tragedy at St Anne’s Hospital, NEDCo said it will be relentless in its revenue mobilisation exercise. Rashid Damba, the hospital’s accountant, says the posture of the power firm is dangerous.
“If this is how things will go then more lives are likely to be lost, especially at the hospitals. They need to execute this exercise with a human face because human life is more important than money,” Damba says.
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