….MD signals outsourcing debt collection to external company despite idling staff
The management of the cash-strapped Electricity Company of Ghana (ECG) has noticed that it is considering other alternatives to retrieve funds from defaulting customers.
According to the company’s Managing Director, Samuel Dubik Mahama, his outfit would outsource the debt collection to private companies after the ongoing exercise ends on Friday, despite recovering half of all unpaid GH¢5.7 billion from its customers.
The announcement that the ECG is planning on outsourcing it revenue mobilization is raising eyebrows of many insiders as the state company, has always been the target of certain interest groups, especially politicians who see it as a cash cow to be milked dry, despite its heavy indebtedness to GRIDCO, Bui Power and the Volta River Authority (VRA).
The ECG boss gave this hint on Accra-based Joy FM’s yesterday, Tuesday, April 18, 2023.
But already, there is a specialized task force created by him in place leading the current revenue collection drive which is paid commission based on what they collect from the consumers.
Interestingly, there is also another payment being made to an in-house department known as Revenue Protection Unit which is also paid commissions despite the huge presence of employees on the company’s payroll who are most idle about.
It was the cash cow mentality which led to the collapse of the Power Distribution Services Ghana Ltd (PDS) concessionaire arrangement after it was discovered that a fraudulent demand guarantee, instead of an insurance had been used by the consortium to take the assets and funds of the state-owned power company.
PDS was also unable to invest the needed capital into ECG and also refused to either properly account for the monies collected and also return what was left, including those stashed in accounts at CalBank from which huge transfers were made from time to time to other accounts at the Ghana Commercial Bank (GCB).
The fraud among others, led to the United States’ Millennium Challenge Corporation (MCC) withdrawing US$190 million of grant funding to Ghana after the government cancelled a concession agreement between the state-owned ECG and PDS.
Mr Mahama, admitted that all the money in default cannot be retrieved in the stipulated time, therefore, the need to employ other options.
“There is a possibility that we might even sell the debt to private institutions to go and collect. It is something that we are considering because we’ve gotten to the point where we need all the help we can get.
“So if it means discounting it to other companies and then getting what we need, why not, so it is something on the table worth considering,” he said.
ECG has been disconnecting power to individuals and entities who have failed to pay their debts or agree to a payment plan in a drive to retrieve GH₵5.7 billion in arrears.
The ECG has said that it had retrieved half of its total debts after embarking on a nationwide revenue mobilisation exercise to recover all unpaid GH¢5.7 billion from its customers. It’s not yet clear how much has been paid out as commissions.
At the beginning of the revenue collection exercise, a question was posed to the EC boss about the engagement of some individuals in the name of a taskforce who were being paid percentages of what they collected from the power consumers as debts owed the company.
However, sounding rather angry on Asaase FM, shortly after the commencement of the exercise, he admitted that a taskforce was leading the collection of the monies and retorted that “of course they get a percentage. Even in ECG, there is a department in ECG that assists in revenue protection that’s supposed to get a certain percent of what they do”.
Mr Mahama went on, “you have a task force going round out there, of course they’ll have a percentage but the question that person needs to be asking is how is that percentage shared? That is where they need to go rather than sit down and say they get a percentage, they get a percentage. I can tell you for a fact, almost half of that percentage goes into their operations. It doesn’t go into their pockets”.
The ECG boss warned “so sometimes before we sit on the sidelines and criticize and criticize, maybe we should do a deep dive and we will realize that nobody is cheating anybody. If there is someone working for you, should the person work for you, assume….. you as a company we sell power, we have vendors, who sell power for us at a 2.5% commission. We also have bounded cashiers who collect money for us at 3% commission. Are they wrong in doing that?
“Then you have people who are boots on the ground through the sun to make sure that things are done right, and you are actually worried about what? So yes, they do accept, take a percentage but the way the percentages are designed, it is designed to make sure that half of it goes into their operations.
He said “as MD, I can confidently say, I haven’t signed a voucher for any other honoraria’s payments to the task force team in their operations. I don’t give the taskforce money like oooh you need fuel to. The taskforce sees money from what they collected as we’ve designed it in such a way that it manages their operations.
It remains unclear, what the terms and condition of the taskforce are as well as who is behind it when there EGC staff who are idling about and could be deployed to collect some of these monies even with a threat of disconnection.
The one-month exercise targeted domestic users, businesses, organisations, ministries, departments and state agencies for power already consumed from 2022 to this year.
ECG had announced that it would embark on a revenue mobilisation exercise from March 20 to April 20, 2023, to recover all debts owed by all categories of customers, including state-owned enterprises (SOEs).
Consequently, the company was temporarily closing down all its administrative offices to deploy its staff to be collectors on the field during the one-month period.
However, the engineers, technical staff and the operations, as well as the customer care units, are to be at work to attend to customers.
The ECG MD, explaining the rationale for deploying all administrative staff to be collectors for the ECG said the debt situation had reached worrying levels, thus it had become important to ensure that it was improved to preserve the integrity of the company.
He said while the company had an idea about the debt situation, the picture was better painted after ECG upgraded its digitalization process, hence the need to reverse the situation before it negatively affected its operations.
He pointed out that GH₵500 million was used to offset debt of some public institutions including GH₵200m for Ghana Armed Forces (GAF), Ghana Police Service GH₵120 million among others.
According to him, ECG is considering GH₵1.2 billion tax offset using the debts of some state institutions to clear tax obligations owed Ghana Revenue Authority (GRA).
The ECG boss was confident that if all the over 4.5 million consumers with prepaid and postpaid being 50 percent pay their bills, ECG will make GH₵2 billion a month as a company and disclosed that at the time he assumed office, the company was making about GH₵125 million a month and recording over 100% revenue losses.
In order to curb revenue losses, he implemented end-to-end digitalization which has increased revenue significantly.
As part of the reforms, he said bulk vendors increased from 400 to over 1,000 leading to revenue increase.
Quota vending jumped from GH₵100million to GH₵200million a month
He revealed that revenue from quota vending rose from GH₵4.6 million to GH₵13 million a day which translates into a monthly increase from GH₵100 million a month to over GH₵200 million a month.
