The Electricity Company of Ghana (ECG) is losing approximately 27 per cent of the electricity it receives for distribution due to a combination of technical failures and commercial inefficiencies, a development that has severely weakened the company’s finances and threatens its ability to pay power producers.
Electrical Engineer Hesford Quaye-Larbi made the disclosure on JoyFM’s Super Morning Show on Tuesday, September 1, warning that the losses have crippled ECG’s revenue mobilisation efforts.
The Problem Explained
“What ECG sells, it is unable to collect all the revenue. The system losses, which are both technical and commercial, also add up. As we speak, I think the loss is about 27 per cent,” Ing. Quaye-Larbi stated .
He drew an analogy to make the situation relatable: “If you are given 100 goods to sell and 27 are lost, it means you have made losses” .
The engineer explained that technical losses occur as electricity travels through transmission and distribution infrastructure, often caused by overloaded transformers, aging lines, and inadequate maintenance . When demand exceeds the capacity of transformers and other equipment, pressure builds on the network, leading to equipment failure, low voltage, and power outages.
” If a transformer is overloaded, there are losses. The losses go back into the system, and that can trip the line,” he explained .
Commercial losses, on the other hand, stem from illegal connections, meter tampering, inaccurate billing, and failures in revenue collection . He identified illegal connections as a significant contributor to the sector’s difficulties, affecting generation, transmission, and distribution.
Recent Infrastructure Initiatives
In response to these challenges, the power distribution company has been undertaking various measures to combat commercial losses. In July 2025, ECG’s Volta Region launched a smart meter rollout as part of its broader Loss Reduction Project, aiming to reduce power theft and improve revenue collection . The initiative deployed smart prepaid meters to replace faulty ones and transition customers from outdated flat-rate plans.
More recently, ECG’s Eastern Region reported recovering over GH¢1.5 million from power theft activities in 2025, including 33 cases of meter bypass, 37 of meter tampering, and 47 unauthorised service connections .
Financial Implications
The IMF’s 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF) highlighted that technical and commercial losses at ECG stood at 27.1 per cent in 2024, even higher than the figure quoted by the engineer .
The losses have contributed to a significant accumulation of arrears. ECG’s outstanding obligations to independent power producers (IPPs) and fuel suppliers peaked at US2.8 billion by the end of the year following government interventions .
The IMF noted that ECG’s collection rate was approximately 86 per cent in 2024, meaning a significant fraction of electricity billed is not recovered, with non-payment by public sector entities accounting for a large share of the shortfall .
Calls for Reform and Investment
Ing. Quaye-Larbi stressed that ECG must reduce its losses and improve revenue mobilisation to generate sufficient funds to pay independent power producers and other suppliers.
“You need to collect the money to pay the IPPs and the power suppliers so that they can also generate. They are buying fuel to run their plants,” he stated .
He maintained that recovering a substantial portion of the estimated 27 per cent losses could provide resources to strengthen the power sector without necessarily increasing electricity tariffs.
The engineer also called for greater investment in electricity infrastructure to create a robust distribution and transmission system capable of meeting growing demand .
Government Reforms and IMF Recommendations
The government has been implementing reforms to address the sector’s financial challenges. Energy Minister Dr John Abdulai Jinapor recently announced that the government had cleared about US750 million through a series of financial and operational reforms .
Monthly declarations into the Cash Waterfall Mechanism—a transparent, rule-based financial model used to distribute electricity revenues to sector players—have increased to nearly GH¢15 billion, up from GH¢6 billion a month, with most IPPs now receiving close to 100 per cent of their invoices .
The IMF has urged sustained quarterly electricity tariff adjustments, regular publication of audit reports on ECG’s revenue collection accounts, and full implementation of the Cash Waterfall Mechanism. The Fund has also identified increased private-sector participation in electricity distribution as a key reform, with concession arrangements expected to be awarded by June 2027 .
Despite these efforts, the IMF projects the sector’s shortfall at about US$1.1 billion in 2026, driven largely by high collection and distribution losses and costly generation contracts . The Fund stressed that a more efficient and financially sound energy sector is necessary to support economic growth, attract investment, and reduce pressure on public finances.
