{"id":33884,"date":"2025-01-16T20:24:03","date_gmt":"2025-01-16T20:24:03","guid":{"rendered":"https:\/\/sotnews.agency\/?p=33884"},"modified":"2025-01-16T20:24:03","modified_gmt":"2025-01-16T20:24:03","slug":"inside-ecgs-financial-maze-ghs-303-million-in-unexplained-tax-offsets-found-by-pwc-audit","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=33884","title":{"rendered":"Inside ECG\u2019s financial maze: GHS 303 million in unexplained \u2018tax offsets\u2019 found by PwC audit"},"content":{"rendered":"
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\n \t<\/i> Read Time:<\/span>2 Minute, 58 Second <\/div>\n\n <\/div>
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A forensic audit of the Electricity Company of Ghana (ECG)<\/a> has uncovered GHS 303.48 million in unexplained \u201ctax offsets,\u201d raising serious questions about financial transparency and revenue allocation within the power sector.<\/p>\n

The PricewaterhouseCoopers (PwC) audit<\/a>, covering October to December 2023, reveals that Ghana\u2019s primary electricity distributor made these substantial deductions without providing supporting documentation or clear rationale for the transactions.<\/p>\n

Breaking down the numbers and findings<\/strong><\/h3>\n

According to the audit report, ECG recorded GHS 253.48 million in tax offsets in November 2023 and an additional GHS 50 million in December 2023.\u00a0<\/p>\n

These deductions were made before calculating revenue available for Level B beneficiaries in the Cash Waterfall Mechanism (CWM), the system designed to ensure fair payment distribution across Ghana\u2019s energy sector.<\/p>\n

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GHS 303.48 million was made as deductions in the CWM against the net revenues after Level A IPP allocations for the two months (November 2023 and December 2023). These deductions were described as tax offsets amounting to GHS 253.48 million in November 2023, and GHS 50 million in December 2023. (Image via PwC Audit Report)<\/em><\/figcaption><\/figure>\n

\u201cECG could not provide us with evidence supporting these tax offsets and the rationale for doing so,<\/em>\u201d PwC stated in its findings, highlighting a significant gap in financial accountability.<\/p>\n

\u200b\u200bThe report highlights the following discrepancies:<\/p>\n

Unexplained tax offsets:<\/strong> GHS 303 million was identified as offsets against ECG\u2019s tax liabilities, with no clear documentation or justification provided.<\/p>\n

Weak reconciliation processes:<\/strong> ECG\u2019s failure to reconcile tax records with GRA filings contributed to these unexplained discrepancies.<\/p>\n

Non-compliance risks: <\/strong>The absence of clear documentation for these offsets exposes ECG to potential regulatory scrutiny and penalties.<\/p>\n

Impact on expected power sector payments by ECG<\/strong><\/h3>\n

The audit reveals a troubling pattern in ECG\u2019s statutory payment practices.\u00a0<\/p>\n

While the company is required to allocate 12.5% of net collections for statutory payments after Level A Independent Power Producer (IPP) allocations, no direct statutory payment allocations were made in November and December 2023.<\/p>\n

Instead, these unexplained tax offsets effectively reduced the pool of funds available for distribution to Level B beneficiaries, which includes critical power sector stakeholders.<\/p>\n

Adding to the complexity, the audit uncovered a GHS 500 million credit note issued by ECG to the Ghana Revenue Authority (GRA), intended to offset liabilities through April 2024.\u00a0<\/p>\n

This arrangement, part of a broader agreement between the Government of Ghana and ECG, affects the settlement of electricity bills by Ministries, Departments, and Agencies (MDAs).<\/p>\n

\u201cThe issuance of these credit notes means that MDAs who owe ECG will not make any payments for the period covered by the credit notes,<\/em>\u201d the audit notes, adding that this \u201chas the effect of depriving the beneficiaries of the CWM of their share of collections.<\/em>\u201c<\/p>\n

Broader financial management issues uncovered in the PwC Audit Report<\/p>\n

The tax offset findings are part of a larger pattern of financial irregularities at ECG. The audit also revealed:<\/p>\n