The Electricity Company of Ghana (ECG) faced a significant financial setback in 2021, reporting a loss of ¢1.913 billion compared to a profit of ¢822.549 million in the previous year, signifying a worrisome 332.7% deterioration in its financial performance.
The 2022 Auditor General Report revealed that the company’s total income dropped by 13.7% to ¢12.104 billion in 2021.
This decline was primarily attributed to the reduction in government grants, which were payments made to power producing companies on behalf of ECG.
In terms of direct costs, the company incurred ¢12.104 billion in 2021, down from ¢14.03 billion in 2020.
However, total expenditure increased by 6.1% from ¢13.210 billion in 2020 to ¢14.018 billion in 2021.
This rise was mainly due to increased expenses in power purchases and transmission costs during the review period.
The company’s financial position was further impacted as it struggled to meet short-term obligations, as evidenced by a decrease in the current ratio from 0.6:1 in 2020 to 0.5:1 in 2021.
Analyzing its balance sheet, ECG’s Non-Current Assets rose by 9.7% from ¢20.468 billion in 2020 to ¢22.461 billion in 2021.
The increase was attributed to gains recognized from asset revaluation and the acquisition of additional property, plant, and equipment during the year.
Additionally, Current Assets saw a 2.2% increase from ¢8.064 billion in 2020 to ¢8.241 billion in 2021, primarily driven by a rise in trade and other receivables.
However, Current Liabilities experienced a substantial 21.5% increase from ¢14.566 billion in 2020 to ¢17.698 billion in 2021, mainly due to an increase in trade and other payables.
The financial challenges faced by ECG in 2021 highlight the need for strategic measures to address the company’s current financial situation and ensure its sustainable growth and stability in the future.