Dr. Eikplim Kwabla Apetorgbor
The suggestion to privatize the billing and collection segment of the Electricity Company of Ghana (ECG) is aimed at addressing inefficiencies in revenue collection.
While outsourcing can sometimes improve service delivery, this approach does not address ECG’s fundamental challenges. Instead, amore sustainable, cost-effective solution is the deployment of intelligent prepaid meters, ensuring that consumers pay before usage—just as mobile phone users purchase airtime before accessing telecom services.
Key Problems with Privatizing ECG’s Billing and Collection It Fails to Address the Root Cause of Revenue Leakages
The core problems affecting ECG’s revenue collection include, technical and commercial losses, largely due to power theft, illegal connections, and meter tampering. Billing inefficiencies, where estimated bills lead to disputes and non-payment.
Collection bottlenecks, as ECG struggles to enforce payments, particularly from high-profile consumers, including government institutions. Privatizing billing and collection does not directly address these underlying issues. If enforcement mechanisms remain weak, a private firm will face the same challenges as ECG.
Increased Operational Costs Without Guaranteed Results
Private entities will operate for profit, meaning ECG will have to either absorb additional costs or pass them on to consumers, potentially increasing electricity tariffs. Additionally, ECG would still bear the risk of non-payment if enforcement mechanisms remain weak.
– Risk of Losing Control Over Revenue Collection -Billing and collection are ECG’s core revenue-generating functions. Handing over this segment to private firms could weaken ECG’s control over its finances, leading to revenue leakages, accountability concerns, and contractual disputes—as witnessed in Ghana’s failed Power Distribution Services (PDS) concessionin2019.
– Lessons from Failed Privatization Attempts-Ghana’s PDS experience showed that outsourcing critical functions does not always guarantee efficiency. Similarly, in Nigeria, attempts to privatize revenue collection for electricity utilities faced backlash due to billing inconsistencies and poor service delivery. ECG must learn from these experiences.
Why Intelligent Prepaid Meters Are the Best Solution
1. Revenue Assurance & Elimination of Debt
Cost Savings & Operational Efficiency
Eliminates the need for meter readers and revenue collectors, reducing payroll and administrative costs. Prevents billing errors and disputes by ensuring accurate, real-time consumption tracking. Reduces opportunities for corruption and illegal connections, as smart meters detect tampering.
2. Enhanced Customer Experience & Transparency
Prepaid meters empower customers to monitor their electricity usage in real-time, avoiding billing surprises and allowing better budgeting. This increases consumer satisfaction while reducing disputes with ECG.
3. Global Industry References
Telecom Industry – The Prepaid Airtime Model- Globally, telecom providers operate on a strict prepaid basis, ensuring zero debt accumulation. This approach has guaranteed financial sustainability in the industry.
Electricity distribution can adopt the same model. For instance, Nigeria’s Prepaid Metering Reform-Nigeria’s Meter Asset Provider (MAP) initiative facilitated mass deployment of prepaid meters, significantly improving revenue collection and reducing disputes between consumers and distribution companies, South Africa’s Eskom Prepaid Rollout-Eskom introduced prepaid meters in low-income areas, tackling non-payment issues and boosting cash flow. The system allowed better electricity access while securing revenue.
Prepaid Metering Is ECG’s Most Cost-Effective Path Forward
Rather than privatizing billing and collection, ECG should prioritize mass deployment of intelligent prepaid meters to ensure 100% revenue collection upfront, eliminate billing inefficiencies and disputes, reduce operational costs and corruption risks and improve customer satisfaction and energy accountability.
ECG’s challenges are not insurmountable, and global best practices demonstrate that prepaid metering is the most effective and sustainable solution for improving revenue collection and ensuring financial stability in Ghana’s power sector.
