The three State-Owned Enterprises (SOEs) with the greatest liabilities totaling GHC 28,583.63 million are the Electricity Company of Ghana (ECG), the Ghana Cocoa Board (COCOBOD), and the Ghana National Petroleum Corporation (GNPC).
According to the Ministry of Finance’s 2020 State Ownership Report, the three institutions were ranked first, second, and third in the league of SOEs with the largest Liabilities (FY2020).
At the end of 2020, these three (3) companies accounted for 40.86 percent of total liabilities in the SOE sector.
The three institutions are critical to Ghana’s ability to maintain electricity supply to residential and industrial customers, as well as the country’s ability to sustain and improve the livelihoods of over 850,000 cocoa farmer households and the government’s free high school policy.
With a liability of GHC 13,796.38 million, the ECG is the SOE with the greatest liability. This is a 25.88 percent rise (GH4,578.84 million) above the similar amount for 2019, which was GH17,689.93 million.
Between 2016 and 2020, the overall liability of the electricity distributor increased at an annual rate of 26.02 percent on average.
Current liabilities account for 73.79 percent of ECG’s total liabilities in 2020, driven mostly by short-term borrowing and an increase in trade and other payables.
Credit facilities and loans secured from international and local financial institutions such as the International Development Association (IDA), KFW, AfDB, MoF Special Loan, GCB Bank Limited, Fidelity Bank, UMB, and First Atlantic Bank Ghana Limited are among the short-term borrowings at the end of 2020.
“It is apparent that ECG’s mounting current liabilities are linked to the company’s diminishing ability to meet its financial obligations when they become due.” The buildup of arrears by ECG during the time demonstrates this,” the 2020 State Ownership Report stated.
The financial situation of ECG puts pressure on the finances of power producers who sell directly to ECG and GRIDCO, the main power transmission business.
The research states that COCOBOD, the cocoa industry regulator, is not very liquid.
COCOBOD’s liquidity ratios of 0.82 in 2020 and 0.75 in 2019 indicate that the firm may have difficulties meeting its short-term commitments as they become due.
“Free cash flow: COCOBOD’s free cash flow situation in FY2020 was minus GH115.14 million, compared to GH496.52 million in FY2020,” according to the report.
Total liabilities for the GNPC have grown from GHC 1,775.81 million in 2016 to GHC 11,350.96 million in 2020.
GNPC had the highest Net Loss of GH1,618.82 million among energy SOEs in the year under review, according to the study.