PDS significantly reduced ECG’s cost of operations, but cost now escalated – Chamber of IPPs

Former manager of the Electricity Company of Ghana, Power Distribution Services (PDS) Limited significantly reduced the cost of operations of the electricity distributor, Elikplim Kwabla Apetorgbor, Chief Executive of the Chamber of Independent Power Producers and Bulk Consumers has said.

Speaking at a forum organised by the Institute of Economic Affairs on “What does Ghana Stand to Gain from PPA Transparency”, Mr. Apetorgbor said records and reports have shown that PDS had significantly reduced ECG’s cost of operations – direct costs and other avoidable costs – to a very significant level leading to its revenue maximisation at the time, adding “for a fact, they [PDS] were raking in about 98% of invoices.

“Most importantly, there is the need for a thorough investigation of what is called commercial losses on ECG’s book. This is now reported by the Energy Minister to be about 30%. How did it come about?”, he questioned.

Furthermore, he said, “my study revealed that this economic or commercial gap for which the government is continuously borrowing to fund via a special purpose vehicle – Delta Fund, is largely due to an unsustainable and unjustifiable business or commercial model being implemented by ECG to some of its bulk customers.”

Mr. Apetorgbor’s assertion was based on the fact that ECG sells power to some of its big bulk customers that represent about 25% of its customer base at a price lower than even its purchase or cost price from the power generators.

“With this unsound business model, the revenue gap or shortfall can never be closed, even if all PPAs are converted to take and pay”, he added.

“If transparency, as we understand is important”, said, adding “then ECG needs public enquiry in cost engineering and transaction cost analysis

He outlined that transparency may not necessarily lead to least cost procurement if the actors on the electricity supply value chain and the regulators are not allowed to do an objective work, adding “political influence and interference on the activities of the regulators should be minimized.”

The Government of Ghana in October 2019 terminated the Concession Agreement with PDS Limited over the take-over of the assets of ECG for the distribution of electricity in the southern sector of the country.

Source: myjoyonline