Officials of Hubtel, a prominent payment services provider in Ghana, on Tuesday, April 2, 2024, revealed the finalization of commercial agreements with the Electricity Company of Ghana (ECG), the nation’s largest power distributor.
However, the announcement comes amidst growing controversy surrounding the partnership and lingering issues with power outages, locally known as “Dumsor.”
According to Hubtel, its collaboration, has revolutionized ECG’s operations and significantly boosted revenue collection.
Nonetheless, the lack of specific monetary details provided by Hubtel, has raised eyebrows, with critics accusing the company of obscuring financial specifics behind vague statistics to justify what they term as a sole-sourced transaction.
The agreement, according to Hubtel officials, began with them simply approaching “ECG in May of 2022 with unsolicited proposals to offer its billing and payment technology to solve ECG’s numerous commercial challenges”.
However, while Hubtel, boasts of its contribution to ECG’s financial improvements, the ongoing power outages in the country have been linked to ECG’s failure to settle payments with Independent Power Producers (IPPs), casting doubt on the effectiveness of the partnership.
Those familiar with the deal, insisted that the transaction which had witnessed a shutdown of ECG’s bill collection points across the country, is costing ECG a whopping 6percent for every payment made by power consumers, especially through Mobile Money (MOMO) transactions facilitated by Hubtel.
Despite Hubtel’s assertion that it charges a lower fee of 1.95percent on transactions processed through its platform, critics argue that the overall cost to ECG remains substantial.
“We charge a fee of 1.95% on all transactions processed through the platform. 1% of this 1.95% is typically retained by the mobile money and card scheme providers, and Hubtel receives 0.95% as our fees,” stated Hubtel’s Head of Corporate and Legal Affairs, Cornelis Rouloph Otoo, who also disclosed that the company had allocated a budget of US$25 million for the project, having already spent approximately US$12 million on various expenses.
Many observers, have drawn parallels between the Hubtel-ECG partnership and the controversial Power Distribution Service (PDS) deal, which saw a consortium linked to associates of President Nana Akufo-Addo, assuming control of the state power distributor, resulting in the loss of US$190 million in grants under the “Power Africa” initiative by the Millennium Challenge Corporation (MCC).
The Herald, has received reports of a lavish celebration hosted by ECG and Hubtel officials at a pub in Dzorwulu, Accra, following the signing of the deal, fueling suspicions of personal gain among involved parties.
As the nation grapples with persistent power challenges, questions continue to mount, regarding the transparency and efficacy of the Hubtel-ECG partnership, leaving many to wonder about its true impact on Ghana’s energy landscape.
Part of Hubtel’s in its self-promoting news release said that its relationship with ECG goes back to 2007, when the company, then operating as SMSGH, deployed ECG’s very first APIs for accessing postpaid bills and sending SMS alerts. In 2011, the company also managed the nationwide deployment and rollout of ECG’s first-ever Point-of-Sale devices to collect payment.
Having received the first license from the Bank of Ghana to operate as an Enhanced Payment Services Provider, Hubtel approached ECG in May of 2022, with unsolicited proposals to offer its billing and payment technology to solve ECG’s numerous commercial challenges.
By July 2022, an aggressive digital transformation plan was launched by the Board of Directors of ECG, which included a proof-of-concept agreement for Hubtel to implement its proposed solutions at no upfront cost to ECG.
In fulfilment of the requirements of the proof-of-concept, Hubtel re-designed, developed, and implemented a complete overhaul of ECG’s commercial systems and payment frameworks and also took over the responsibility for processing and securing payments for bills, electricity meter credits, vendor quota purchases, and non-energy invoices.
Hubtel also collaborated with other major technology service providers and relevant departments within ECG to complete the overhaul of ECG’s commercial systems and empower the company’s staff to support revenue collection and growth.
Before Hubtel’s involvement, ECG faced significant financial and commercial challenges. Hubtel released an accompanying presentation outlining these challenges and the plans it has implemented to resolve them permanently.
Since the full launch of the new commercial systems in March 2023, ECG has seen the biggest jumps in its revenues and customer satisfaction ratings.
Speaking on the news, Alex Bram, CEO of Hubtel, expressed pride in the company’s contribution to ECG’s digital transformation journey, stating, “I am proud that our billing and payment technology has proved to be exceptionally useful to ECG’s digital transformation plans. As you know, ECG is such a vast organization with very big legacy problems. So, when the Board of ECG accepted our unsolicited proposals to transform its commercial operations, we knew we had to bring the very best of our experience and technology. And I’m happy we have delivered on time and within the budget limits set by the Board.”
He further added, “Beyond the successes we have already chalked up on this project, I’m excited about our ability to use artificial intelligence and machine learning to monitor consumption and payments of all customers to detect illegal connections, abnormal behaviour, and tampered or faulty meters. This is not only introducing a new regime for protecting ECG’s revenues but also helping boost the company’s financial performance and strengthen Ghana’s economy.”
In a note, the Head of Infrastructure at Hubtel, Francis Wilson wrote “We have tremendously reduced the frequent downtimes, erratic service failure, and poor network performance that was affecting both prepaid and postpaid metering systems.
Through the implementation of real-time monitoring tools and a dedicated, proactive monitoring team available 24/7 to oversee transactions, infrastructure, applications, metering systems, and networks, ECG’s metering systems now achieve uptime levels consistently surpassing 99% for many days, leading to improved service quality and customer satisfaction, ultimately driving revenue growth.”
In an interview, Patrick Asare-Frimpong, Head of Products at Hubtel, emphasized the need to keep in mind the sole objective of constant innovation to drive revenue growth for ECG as demanded by the Board and management of ECG.
“This partnership empowers both ECG and its customers to foster a more efficient service delivery. Hubtel’s teams have played a key role in developing several new products and systems, such as the ECG PowerApp mobile application, ECG PowerApp web application, third-party vending systems, bank & fintech integration tools, staff portal, backend portals, real-time revenue monitoring and assurance systems, and an all-new OperationZero App to tackle power theft specifically. The most important requirement here is to keep improving these systems until ECG becomes strongly profitable.”
Commenting about the cost of the project and the recurring operating costs of the new systems, Cornelis Rouloph Otoo, Hubtel’s Head of Corporate and Legal Affairs, explained that “While the project is still ongoing, Hubtel’s work with all the other consultants and third-party service providers have not exceeded the US$25m limit we committed to. So far, US$ 12m of this has been accessed to pay for software license fees, database license fees, cloud infrastructure fees, service support, and engineering man-hours. For these systems, ECG has demanded to own all licenses and intellectual property comprehensively.”
On the recurring costs of the project, he added that “As we do with our standard agreements with merchants and retailers using Hubtel’s platform, we charge a fee of 1.95% on all transactions processed through the platform. 1% of this 1.95% is typically retained by the mobile money and card scheme providers, and Hubtel receives 0.95% as our fees. In the case of ECG and the complexities of its settlement requirements, we passed on all fees retained by the upstream mobile money & card, settlement, and banking service providers directly to ECG so that we can maintain our fee of 0.95%. Thus, for clarity, Hubtel’s recurring fee for managing ECG’s new commercial systems is 0.95% – the same as we receive from every business that uses Hubtel’s platform.”
Mr. Otoo went on to say that “…the current payment processing, settlement, and transfer arrangements place significant responsibilities on Hubtel to ensure operational excellence at all times, and we have since November 2022 fulfilled this obligation without any glitch.
