2021 A-G’s report reveals power customers owe VRA ¢4.7bn

Some power customers owe the Volta River Authority (VRA) more than ¢4.7 billion.

This was revealed by the 2021 report of the Auditor-General.

“Our review of the Authority’s ledgers and reconciliations on receivables disclosed that a total amount of GH¢4,764,760,731.41 was due from power customers as of 31 December 2020”, the report noted.

“This contravenes Section 91(1) of Public Financial Management Act, 2016 (Act 921)” the report added.

“We recommended that the Management of the Authority should intensify its efforts to recover the outstanding receivables”.

Below are excerpts of some of the findings in the energy sector:

ELECTRICITY COMPANY OF GHANA-2019 30.

We noted that Management did not withhold taxes on payments relating to goods and services procured from 30 suppliers, resulting in tax loss totalling US$73,918.88, €5,524.32 and GH¢29,243.28. We recommended that Management should pay the tax amount of US$73,918.88, €5,524.32 and GH¢29,243.28, to the Commissioner of Ghana Revenue Authority (GRA) and recover the same from the payees and furnish our office with the receipts for verification.

Management delayed in remitting a total amount of GH¢12,069,302.12 being taxes withheld from payments for goods, services, and works during the 2019 financial year. We urged Management to always ensure that taxes withheld are remitted to the Commissioner General of GRA promptly to avoid sanctions and delay of inflows into the Consolidated Fund.

Our review of the payroll disclosed that payments in respect of PAYE deductions for January and February 2019 amounting to GH¢10,075,056.86 were paid on 2nd January 2020 instead of 15th February and 15th March 2019 respectively. We advised Management to ensure proper supervision of schedule officers responsible for statutory payments to ensure that, liabilities are paid as and when they fall due and within the timelines, as stipulated by the tax laws to avoid payments of penalties.

Management of ECG overspent their approved expenditure budget for the 2019 fiscal year by GH¢1,824,639,713.30. We urged Management to desist from such practices in future to promote an efficient and effective budgetary control system.

We noted, during our review of the Bank Reconciliation Statements for ECG Shipping Account No 1441000303335 with EcoBank and ECG Materials Account No 1081130000901 with GCB Ltd that total credits of GH¢11,360,602.40 and GH¢10,781,687.57 respectively were not investigated and reported to the appropriate Banks for remedial actions to be affected. This brings the total outstanding credits in the two (2) Bank Accounts to GH¢22,142,289.97. We urged Management to ensure that the Managers of the two Banks are immediately contacted to resolve this anomaly for our inspection.

We noted in our review of the Bank Reconciliation Statement for the period under review that, the reconciliation statements prepared for the period between July-December 2019 on ECG’s Shipping Account with Ecobank, disclosed a total wrong debit amounting to GH¢4,810,835.56. We urged Management to ensure that the Managers of the two Banks are immediately contacted to resolve this anomaly for our inspection.

ECG ordered goods from outside Ghana totalling US$6,671,100.00 in 2018 and 2019. These goods were supplied by foreign manufacturers and shipped directly to ECG in 2019. However, our comparison of the order prices with the Manufacturing prices disclosed that ECG incurred an extra cost of US$2,861,793.00 in dealing with the local suppliers instead of engaging the manufacturers directly. We recommended that ECG should deal with foreign Manufacturers directly as much as possible to achieve value for money unless the items are produced by local suppliers.

We reviewed a sample of eighty (80) foreign and local orders for goods and noted that a total amount of US$33,864,855.98, €945,742.17, GB£729,161.38 and GH¢5,373,100.00 respectively were procured under single source without the approval of Public Procurement Authority (PPA). We further advised Management to seek approval from the Public Procurement Authority whenever single-source methods are to be used and, to justify the reasons.

We noted during our procurement audit that the annual procurement plan of ECG was not prepared and reviewed quarterly or periodically to conform to the available budget allocations for the Company. The Entity Tender Committee should ensure that the annual procurement plan of the Company is prepared and reviewed periodically, at least quarterly to conform to the availability of funds and prioritising the procurement needs to the budgetary allocations.

Accra East Region

Improper management of the vehicle log books – GH¢115,255.00 39.

Our review of the vehicle Logbooks of the region’s pool of cars and those allocated to specific officers disclosed that journeys undertaken were not recorded and certified by the officer using the vehicle and full particulars of receipt of the fuel totalling GH¢115,255.00 issued by the fuel attendant to various vehicles were not also entered in their respective Logbooks. We recommended that Management should task the Transport and Materials Manager to ensure that the various recipients of fuel amounting to GH¢115,255.00 account for what they received. Management should also organise training for all the drivers and the Transport Officer on how to effectively use the Logbooks.

Tema Region

Our inspection at the Tema regional warehouse, disclosed that Closed Circuit Television (CCTV) cameras were not installed at the warehouse for surveillance. The shelves to partition the materials have also not been constructed. Management should pay particular attention and expedite action on all efforts at ensuring adequate security at the warehouse to prevent theft and losses.

Ashanti SBU

Our follow up on our previous Management Letter on stolen official vehicle with registration No. GV 19-16 noted that two (2) more vehicles, GW3624-18 and GN6300-18 were snatched away from officers in 2020 resulting in Ashanti SBU losing a total of 3 Pickups with a total value/cost of GH¢516,799.22 between June 2018 and May 2020. We advised Management to consult the appropriate experts to install tracking devices on the company’s new vehicles.

Our review of material reconciliation statements for Ghana Energy Development Access Program (GEDAP) projects for re-routing Enersmart prepayment meters disclosed that out of a total cost of GH¢98,704.51 for unused conductors not returned to stores by three (3) contractors, only GH¢40,005.88 was paid, leaving a difference of GH¢58,698.63 not recovered. We advised Management to ensure that Contractors return all unused materials to stores after projects are completed or are made to pay the full cost of the materials. Meanwhile, effort should be made by Management to retrieve the GH¢58,698.63 from the Contractors.

ELECTRICITY COMPANY OF GHANA-2020

We noted from five (5) sampled payments advice with a face value of GH¢14,075,760.80 that mobilization fees paid to contractors for civil works were overpaid. Our recomputation disclosed that Management paid between 20%- 30% of the sampled contract prices as mobilization fees instead of 15% required. We recommended to Management to desist from such acts and ensure compliance with relevant regulations in future contracts failing which both authorizing and paying officers may be sanctioned in accordance with Section 92 of the Public Procurement (amendment) Act 2016 (Act 914).

Our inspection at the Project Office (Head Office) on 17th June 2021 disclosed that there was no Control Unit set up for 24hrs/7 day surveillance on the movement of cars within the regions. We recommended to Management to treat the above anomaly with urgency and ensure that the consultant speeds up the completion of the project. We further recommended that the consultant should first set up a control Unit at Ashanti SBU since it is a Hotspot Area and also at the Project Office for overall monitoring of the official vehicles.

We noted that the Director of Finance did not withhold 7% withholding VAT on standard-rated supplies totalling GH¢6,836,367.62 procured during the period under review. We advised Management to ensure a deduction of 7% withholding VAT on standard-rated supplies before payments are effected, in order for the government to have prompt receipt of VAT revenue for developmental projects.

Accra East Region

We noted that sixteen (16) payments advice totalling GH¢381,681.29 for farming out and other contract works were awarded to unqualified contractors. We recommended to Management to ensure that all future contracts are awarded to qualified PPA registered entities failing which both paying and authorising officers should be sanctioned accordingly.

We noted that the Regional Accountant did not withhold 7% withholding VAT on standard-rated supplies totalling GH¢169,418.49 procured during the period under review. We advised Management to ensure deduction of 7% withholding VAT on standard-rated supplies before payments are made.

We noted that 26 payment advice totalling GH¢332,220.58 for the procurement of goods and services were without three alternative quotations from other perspective suppliers neither was there any approval from PPA for Single-source procurement. We recommended to Management to ensure that, procurements are always subjected to competition to obtain value for money.

Accra West Region

Our review of payments advice disclosed that fifty-seven (57) payments advice totalling GH¢1,079,937.49 for goods and services were procured from non-VAT registered entities and this resulted in a loss of VAT of GH¢32,435.36 to the State. We recommended to Management to desist from procuring goods and services from non-VAT registered entities to ensure that the necessary VAT revenue is duly raised.

We noted that 36 payments advice totalling GH¢276,679.24 for the procurement of goods and services were without alternative quotations from other perspective suppliers nor was there any approval from PPA for Single-source procurement. We recommended to Management to ensure that, procurements are always subjected to competition to obtain value for money.

Ashanti SBU

We noted that (28) payment advice totalling GH¢588,927.23 for the procurement of goods and services were without three alternative quotations from other perspective suppliers or obtained approval from PPA for Single-source procurement. We recommended to Management to ensure that, procurements are always subjected to competition to obtain value for money.

We noted that the Regional Accountant did not withhold 7% withholding VAT on standard-rated supplies totalling GH¢312,139.70 procured during the period under review. We advised Management to ensure deduction of 7% withholding VAT on standard-rated supplies before payment is effected, in order for the government to have prompt receipt of VAT revenue for other competing needs.

We noted that the monitoring of the tracking devices was not effective and that only two staff (Manager of Transport/Material and transport officer) have access to the device on their laptops instead of a mounted screen for 24hrs/7 days’ surveillance on the vehicles. We recommended to Management to ensure the installation of the devices on all official vehicles, train officers and establish a unit which will monitor the operations of the devices for 24/7 surveillance on the movement of vehicles within the region.

Our examination of a payment advice dated 16th September 2020 with reference No. 0025373 and cheque no. 014281, disclosed that a six-member committee was constituted by head office (Accra) to investigate alleged irregularities in crediting monies to the Quota Accounts of seventeen (17) third-party vendors. We advised Management to submit the Committee and police report that led to the interdiction of culprits for our review.

Tema Region

We noted during the review of the vehicles records of ECG Tema Region that out of one hundred and eleven 111 vehicles, eighty (80) were overaged. The cost for repairs and maintenance for the 2020 financial year was GH¢2,724,507.61 as compared with GH¢1,823,435.72 for 2019 representing 49.41% increase. We recommended that Management should adhere to their fixed assets replacement fund policy to help the Company replenish its old vehicles stock.

Central Region 56. We noted during the review of the vehicles records of ECG Central Region that out of one hundred and twenty-two (122) vehicles, ninety-seven (97) representing 79.5% were overaged. We recommended that Management should adhere to their fixed assets replacement fund policy to help the Company replenish its old vehicles stock.

Western Region

We noted during the review of the vehicles records of ECG Western Region that out of one hundred and sixty-five (165) vehicles, one hundred and two (102) representing 62.4% were overaged. We recommended that Management should adhere to their fixed assets replacement fund policy to help the Company replenish its old vehicles stock.

NORTHERN ELECTRICITY DISTRIBUTION COMPANY (NEDCo)

Contrary to Regulation 50(1) of the Public Financial Management Regulations, 2019, (L.I. 2378), Mr Titus Yiritgee, a bonded cashier at Sawla and two other bonded cashiers at Bole did not lodge revenue collections amounting to GH¢155,122.82. We recommended that Management should intensify its supervisory role over the activities of the Area managers, the Finance Officers and Account Assistants for prompt lodgement of cash revenue collections. Management should also recover the amount of GH¢155,122.82 from the cashiers involved and our office informed for verification.

Our review of the Company’s receivables disclosed a total amount of GH¢1,278,322,542.60 due from power customers as of 31 December 2020. This contravenes Section 91(1) of Public Financial Management Act, 2016 (Act 921). We recommended that the Management of the Company should intensify its efforts and improve its mechanism to recover the outstanding receivables.

Our review of the Company’s payment vouchers disclosed that 30 payments totalling GH¢4,375,932.59 were not supported with official receipts as evidence that the payees acknowledged receipt of the payments. We recommended that Management should follow up on the payees and make available all the receipts for our review.

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Contrary to Section 126(1) of the Companies Act, 2019 (Act 992), we could not obtain evidence that Management filed its annual returns at the Registrar General’s Department as required. We recommended that the Company’s Secretary should ensure that the yearly annual returns are filed with the Registrar General’s Department as required by Section 126(1).