The Auditor-General has discovered significant procurement violations involving the Electricity Company of Ghana (ECG), which totals over $145 million.
These violations took place between 2016 and 2021 and were connected to the execution of 50 contracts for the purchase of 862,750 meters and its accessories.
According to the A-G, ECG’s disregard for the Public Procurement Act, resulted in a lack of value for money, competition, and openness in the procurement process.
The A-G stated that ECG did not look at other options for obtaining meters with the same specifications at a reduced price from manufacturers outside its existing database, even though the meters underwent thorough testing to fulfill criteria.
These violations were discovered as a result of the 2022 Performance Audit Report of the Auditor General on the Management of Meters by the Electricity Company Limited, which was published on July 27, 2023.
The audit, which was carried out from August to December 2022, was designed to evaluate ECG’s power theft prevention planning, budgeting, purchasing, and monitoring processes. Interviews with important employees at several ECG locations were conducted along with document reviews.
Typically, ECG buys meters from suppliers who satisfy certain criteria. When the projected cost of goods exceeds GHC10 million, the Public Procurement (Amendment) Act 2016, or Act 914, requires the use of international competitive tendering (ICT).
Moreover, ECG was supposed to execute open tenders and place advertisements in international media, on the Public Procurement Authority (PPA) website, and in bulletins to promote openness and competition.
The Auditor General discovered that the sampled contract amounts, surpassed the GH$10 million cutoff, necessitating the use of ICT for procurement. However, there was no proof that ECG had properly followed the ICT procedures; rather, the business had used restrictive tendering without first obtaining the required consent from the PPA Board.
However, ECG argued that since it is a limited liability corporation and does not rely on government assistance, it is exempted from the PPA’s restrictions.
Nevertheless, the business sought legal advice on whether it should abide by the PPA and even asked the finance ministry for exemption from compliance with the law, which was denied.
The Auditor General then stated that ECG was required to adhere to the commercial procurement procedures provided in section 15 (2) of the Public Procurement Act in the absence of an exemption. Despite being produced by the organization, the procurement handbook was not yet authorized at the time of the audit.
Furthermore, despite the manufacturer’s inability to produce the agreed goods, ECG did not terminate a contract with the manufacturer who was a part of the procurement process.
The transparency, openness, and effectiveness of ECG’s meter procurement procedures are seriously questioned by these procurement violations.
The report suggested methods to fix these flaws and guarantee that the principles of the Public Procurement Act are followed in all future procurement actions.
Financial Irregularities Uncovered
According to the 2022 Auditor-General’s report, anomalies in the functioning of public boards, businesses, and other statutory institutions for the previous year totaled more than GH15.1 billion.
In comparison to the 2021 figure of GH17.48 billion, the amount is down 13.86%, or GH2.4 billion.
It is crucial to remember that the errors from last year included almost GH15 billion in recoverable amounts and a GH47.28 million administrative infraction. The recoverable element of the irregularities made up 99.69%, and the administrative portion, which was GH47.3 million, made up 0.31 %.
This sum, which is made up of procurement and other irregularities, cannot be recovered. Therefore, in order to maintain fiscal restraint in the management of public resources, the Auditor-General requested that its recommendations be strictly followed.
The majority of the inconsistencies involved unpaid debts, loans, recoverable amounts, cash, payroll, purchases, taxes, retailers, and contracts.
From 2018 to 2022, irregularities were a common occurrence on public boards and organizations; about GH53.87 billion in such cases were reported throughout that time. However, the number of abnormalities rose from GH3 billion in 2018 to GH17.5 billion in 2021, before falling to GH15.1 billion in 2022.
Despite the fact that 113 institutions were audited last year, which is slightly more than the 101 institutions that were audited in 2021, the report, which the Auditor General presented to Parliament, shows that the majority of the irregularity categories decreased last year, compared to 2021.
The procurement irregularities, along with other procedural violations and flaws in public finance management, made up the administrative irregularities.
The study emphasized that there was no financial damage, as a result of the administrative mistakes.