The Electricity Company of Ghana says the latest report by the Public Utilities Regulatory Commission (PURC) on the operations of the power distributor as they relate to the Cash Waterfall Mechanism (CWM), leaves much to be desired.

In expressing disappointment with the PURC’s review of the CWM, ECG said in a statement issued Thursday that the report misrepresents key issues.

According to the ECG, its fuel costs, crucial to maintaining operations, were inaccurately labelled as a “variance,” and while ECG has made significant progress, such as independently procuring fuel, it is framed negatively in the report.

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

Additionally, ECG said the review overlooks forex losses and delays in payments to Independent Power Producers (IPPs), creating a misleading narrative.

ECG has consequently called for more constructive leadership and accurate reporting from the PURC to foster progress in Ghana's energy sector.

Below is the ECG statement:

PURC’s Approach to the CWM Review: A Need for Clarity and Constructive Leadership

As Ghana approaches a pivotal national election, the role of institutions such as the Public Utilities Regulatory Commission (PURC) becomes increasingly crucial. It is therefore disappointing to see that the recent review of the Cash Waterfall Mechanism (CWM) released by the PURC has raised concerns, not for the facts it presents, but for how these facts are being framed and communicated. Under the leadership of Dr. Ishmael Ackah, the PURC’s approach seems to have missed an opportunity to support and highlight the positive progress made in the energy sector, particularly by the Electricity Company of Ghana (ECG).

A key point of contention in the PURC’s report is the labelling of essential fuel costs as a “variance.” This characterization can be misleading. What is referred to as a variance is, in fact, the cost of fuel—a necessary part of ECG’s operations that has been managed effectively by the current leadership. Unlike in previous years, ECG has taken strides to ensure its ability to procure fuel independently, a significant achievement that should be acknowledged rather than downplayed.

The leadership of ECG has worked diligently to stabilize operations and improve performance, especially in areas where previous management struggled. Fuel procurement is a prime example of this progress. It is important that regulatory bodies like the PURC support these efforts by accurately framing the challenges and successes within the sector. While it is understandable that the CWM report must address all aspects of the mechanism, labeling these fuel costs as a variance distracts from the fact that ECG is performing better now than it has in years. This is not a setback, but a necessary operational cost that deserves a more nuanced explanation.

Furthermore, the issue of payments to Independent Power Producers (IPPs) raised in the report requires further clarification. ECG has complied fully with payments to Tier 2 beneficiaries, including the PURC itself, throughout the period under review. In cases where payments to IPPs were delayed, they were primarily used to settle outstanding payments from previous months—a standard practice in managing such accounts. This context is critical to understanding the payment flow and should not be construed as non-compliance.

Additionally, the report seems to overlook the impact of foreign exchange (forex) losses on ECG’s ability to fulfill its financial obligations. The discrepancy between PURC’s exchange rate and the market or Bank of Ghana (BoG) rates results in significant forex losses when making payments to IPPs and WAPCo. For instance, while ECG paid WAPCo US$3 million in July 2024, the Ghana Cedi equivalent recorded was GHS48 million, which PURC reported as GHS43 million. This discrepancy is due to forex fluctuations and should be explained more thoroughly to avoid creating a false narrative of underpayment.

Perhaps most critically, the cost of fuel procurement—which was not factored into the CWM framework—must be seen for what it is: a necessary action taken to ensure the continued provision of electricity despite unforeseen challenges in gas supply. During the period under review, ECG independently purchased liquid fuel amounting to GHS466 million. This proactive approach by ECG to maintain power supply stability should be acknowledged as a success rather than seen as a failure or variance.

The PURC’s role as a regulator is to provide clarity and support for the continued progress of the energy sector. It is important that reports like the CWM review focus on providing accurate and constructive information that supports transparency and helps stakeholders understand the full picture. By framing necessary costs like fuel procurement as variances, the PURC risks confusing the public and detracting from the real improvements made by ECG and other players in the sector.

As we look ahead to the upcoming national election, the energy sector will continue to play a crucial role in Ghana’s development. The leadership of key institutions, including both ECG and the PURC, will be instrumental in ensuring that we continue on a path of progress and stability. However, this requires a shift in approach from the PURC—one that prioritizes clarity, constructive feedback, and a recognition of the genuine progress being made in the sector.

Ghana’s energy sector is moving in the right direction, thanks to improved management practices and a renewed focus on operational efficiency. ECG’s ability to secure fuel independently is a testament to the strides made under its current leadership. As we navigate the challenges of the future, including those posed by forex fluctuations and fuel procurement, it is essential that our regulatory bodies work in partnership with these institutions to foster growth and sustainability.

In conclusion, the PURC’s review of the CWM offers an opportunity for reflection, but it must be handled with care. There is a need for more constructive leadership that provides clear, accurate insights and helps guide the sector towards continued success. We encourage Dr. Ishmael Ackah and his team to focus on fostering this kind of leadership—one that supports progress, innovation, and collaboration, rather than hindering it with confusing narratives.