The Auditor-General has found significant procurement breaches amounting to over $145 million involving the Electricity Company of Ghana (ECG).
These breaches occurred during the period from 2016 to 2021 and were related to the signing of 50 contracts for the procurement of 862,750 meters and their accessories.
ECG’s failure to adhere to the Public Procurement Act led to a lack of consideration for value for money, competitiveness, and transparency in the procurement process, according to the A-G.
While the meters underwent rigorous testing to meet specifications, ECG did not explore alternative possibilities for obtaining meters with the same specifications at lower prices from manufacturers outside its existing database.
The 2022 Performance Audit Report of the Auditor General on the Management of Meters by the Electricity Company Limited, released on July 27, 2023, brought these breaches to light.
The audit, conducted from August to December 2022, aimed to assess ECG’s planning, budgeting, procurement, and monitoring of installed meters to combat power theft. It involved document reviews and interviews with key personnel at various ECG locations.
ECG typically procures meters from vendors that meet its specified requirements. The Public Procurement (Amendment) Act 2016, (Act 914) mandates the use of international competitive tendering (ICT) for procurement when the estimated cost of goods exceeds GH¢10 million.
ECG was expected to advertise in international newspapers, the Public Procurement Authority (PPA) website, and bulletin and conduct open tenders, ensuring transparency and competition.
However, the Auditor General found that the contract sums of the sampled contracts exceeded the GH¢10 million threshold, requiring the use of ICT for procurement.
Nonetheless, there was no evidence that ECG had properly followed the ICT procedures, and instead, the company had resorted to restrictive tendering without the necessary approval from the PPA Board.
ECG’s rationale for not adhering to the PPA requirements was based on its status as a limited liability company that does not rely on government funding.
However, the company sought legal opinion on whether it should comply with the PPA, and even requested exemption from adherence to the Public Procurement Act from the finance ministry, which was not granted.
The Auditor General noted that in the absence of an exemption, ECG was expected to follow the commercial procurement practices outlined in section 15 (2) of the Public Procurement Act. The company had developed a procurement manual, but it had not been approved at the time of the audit.
Furthermore, ECG failed to terminate a contract with a manufacturer involved in the procurement process, despite the manufacturer’s failure to deliver the contracted goods.
These procurement breaches raise serious concerns about the transparency, competitiveness, and efficiency of ECG’s meter procurement practices.
The report recommends corrective measures to address these shortcomings and ensure adherence to the Public Procurement Act’s principles for future procurement activities.
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