The devastating consequences of SHEP Meters on ECG’s revenue collection and electricity sector’s sustainability

In an ambitious push to achieve universal electricity coverage, the Government of Ghana introduced the Self-Help Electrification Program (SHEP) meters, deploying millions across the country.

This move, though laudable in its intent to extend electricity to underserved communities, has proven to be poorly coordinated and detrimental to the finances of the Electricity Company of Ghana (ECG). The lack of strategic planning, oversight, and follow-up in capturing these meters into ECG’s billing database has inadvertently led to widespread revenue losses, unchecked electricity consumption, and exacerbated inefficiencies across the electricity distribution system.

SHEP was designed with the noble objective of bridging the electricity access gap by installing meters in remote areas. Yet, its execution lacked foresight and the critical coordination required to integrate these new meters into ECG’s centralized data management system. As a result, many of these meters remain uncaptured in ECG’s revenue data, creating a “black hole” in the company’s revenue stream. What was intended to empower communities and boost development in rural areas has instead severely undermined the financial stability of ECG, whose mandate is to ensure a sustainable electricity distribution service across the country.

This mismanagement has rippled through ECG’s entire revenue chain, pushing it closer to fiscal insolvency and forcing it to bear a disproportionate share of the blame for Ghana’s current electricity sector challenges.

The failure to capture a significant portion of SHEP meters has led to a situation where consumers are essentially receiving electricity for free. This unbilled consumption is not a small oversight; it represents a significant and irrecoverable loss in revenue, putting an unjustifiable strain on ECG’s finances. Unlike planned electricity subsidies or tariff adjustments that could be covered through government financing, these unaccounted losses leave ECG with an unmanageable deficit in its revenue requirement, which it must then spread across its paying customers. As a result, ECG is forced into an unsustainable cycle of trying to recoup losses by inflating bills for paying consumers, a practice that only deepens distrust and dissatisfaction among its customer base.

The gravity of this situation cannot be overstated. Electricity distribution companies, including ECG, rely on accurate meter data to forecast demand, allocate resources, and most importantly, collect revenue that funds maintenance, infrastructure upgrades, and projects. ECG’s inability to generate revenue from such a large swath of its consumer base directly compromises its capacity to meet these responsibilities, pushing it to the brink of financial instability.

In a bid to manage this shortfall, ECG has resorted to invoicing paying consumers in a manner that seems arbitrary and, in many cases, excessive. This approach not only erodes the trust between ECG and its customers but also opens avenues for unethical practices. ECG staff, burdened with the task of enforcing these inflated invoices, are often forced to negotiate with consumers for “reduced” bills. This subjective approach to billing weakens ECG’s operational integrity, allowing a culture of backdoor deals to take root—a situation that could quickly spiral into widespread corruption within the institution.

The pervasive distrust among consumers, coupled with ECG’s inconsistent billing practices, not only compounds its revenue challenges but also damages the public’s perception of ECG and, by extension, the entire Ghanaian electricity sector. Furthermore, paying customers are, in effect, subsidizing the free electricity enjoyed by those with uncaptured SHEP meters, a grossly inequitable situation that undermines the principle of fair and transparent billing.

The Public Utilities Regulatory Commission (PURC), as the principal oversight body for utility services in Ghana, cannot afford to remain passive in the face of these issues. PURC is tasked with ensuring that utilities operate efficiently and that consumers are protected from unfair practices. It is therefore incumbent on PURC to step in and provide stringent guidance and oversight regarding the deployment and integration of meters within ECG’s system. PURC must hold the government accountable for the proper incorporation of SHEP meters into ECG’s billing system, with a clear timeline and actionable milestones to ensure that all electricity consumers are appropriately billed.

Moreover, PURC should mandate that ECG halt the practice of billing innocent consumers on a subjective basis, as it violates the principles of transparency and accountability that PURC is duty-bound to uphold. A holistic review of ECG’s billing and customer engagement protocols is needed to ensure that consumers are treated equitably and that revenue recovery mechanisms are standardized and transparent.

While the government has frequently blamed the Independent Power Generators (IPGs) for exacerbating the financial strain on ECG, the reality is that ECG’s challenges are, to a large extent, a result of government-induced inefficiencies. The lack of coordination, planning, and accountability in the deployment of SHEP meters falls squarely on the government. By sidestepping its own failures and placing the blame on IPPs, the government creates a damaging narrative that diverts attention from the root cause of ECG’s challenges and unfairly demonizes the very stakeholders that are essential to Ghana’s electricity supply chain.

In light of this, it is imperative that the government prioritize transparency and take ownership of the role it has played in compounding ECG’s financial woes. A systematic review of the SHEP initiative is necessary, with an eye toward identifying gaps in coordination and data integration. The government should support ECG with the resources required to capture all active meters in its system, eliminating revenue leakages and providing a more sustainable pathway to universal electricity access.

Expert Judgement

The SHEP meter deployment, while launched with a noble goal, has exposed ECG to an unsustainable level of revenue leakage that threatens its long-term viability. The government’s oversight and lack of strategic integration in this initiative have led to a scenario where ECG is unable to collect revenue from a significant portion of its consumer base, creating systemic inefficiencies that are now crippling the sector. PURC must act as a proactive regulator, stepping in to ensure ECG operates under fair, transparent, and accountable billing practices. At the same time, the government must confront and rectify its own missteps, rather than blaming the challenges of ECG on IPGs.

By Dr. Elikplim Kwabla Apetorgbor, (Power Systems Economist)

 

 

 

 

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