The Africa Center for Energy Policy( ACEP) is warning of a looming crisis in the power sector owing to the inability of the Electricity Company of Ghana (ECG) to service debts owed to Independent Power Producers (IPPs).

The Public Utilities Regulatory Commission (PURC), in its latest letter to the president, warned of an imminent collapse of the power distributor as debts in the energy sector continue to rise.

Addressing the press on the recent developments in the energy sector on Thursday, September 19, ACEP cited ECG management for engaging in supposed forex rate manipulations.

Policy Lead of Petroleum and Conventional Energy at ACEP, Kodzo Yaotse, also pointed out what they identify as a potential inflation of ECG’s power application contract signed with software firm Hubtel.

“The second prime example of a political settlement mechanism is exchange rate manipulation. One of the major challenges of ECG in its handling of the exchange rate for its transactions, in many cases, the exchange rate reported by ECG to the cash waterfall committee was significantly higher than the interbank exchange rate.

Read also: PURC warns of ECG’s potential bankruptcy in a letter to Presidency and Energy Minister

“The exchange rate manipulation created a net exchange loss of about  GH₵ 6.5 billion in 2022, which is up from GH₵600 million in 2021 to about GH₵ 7 billion in 2023,” he claimed.

He further stated that ACEP through the RTI requested the historical exchange rate used by ECG for its transaction in May 2024 but has not been supplied that data.

He asserted that “This level of manipulation undermines the ability of ECG to pay value chain and redirect public resources away from legitimate expenditure problems.”

ACEP is in this regard asking for the dismissal of the current management of the Electricity Company of Ghana.

According to him, "the growing fiscal burden imposed on the economy by ECG’s continuous poor performance has become a ticking time bomb that can undermine the progress made after the Domestic and international debt restructuring to make Ghana solvent."

ACEP therefore recommended that the "PURC should assume its regulatory function over ECG - specifically, the Commission should implement aggressive measures to have visibility over how much revenue is collected and spent on value chain participants and any other expenditures undermining the sustainability of the sector."