Recent allegations circulating in Ghanaian media and among civil society organizations (CSOs) regarding Hubtel’s involvement with the Electricity Company of Ghana (ECG) have prompted the technology firm to issue a response.
At the center of the controversy are claims that Hubtel has been paid significant sums for its role in ECG’s digital transformation, as well as accusations of political influence and an overly lucrative contract. Hubtel’s statement refutes these claims, laying out the facts to defend its role and achievements in ECG’s commercial revamp.
Disputed Payments
One of the primary claims Hubtel addresses is the suggestion that the company has received $25 million from ECG for the PowerApp software it developed. Critics have pointed to this sum as evidence of inefficiency and mismanagement, implying that Hubtel has been overpaid for its work. In response, Hubtel clarified that the $25 million figure was a cost ceiling established by ECG’s Board of Directors at the start of the project, not a payment directly made to the company.
To date, Hubtel asserts, ECG has spent approximately $12 million, well within this limit, to replace outdated systems and implement upgrades crucial to its commercial operations. The expenditure covers a broad range of services, including database upgrades, overhauls to customer and revenue management systems, and enhancements to ECG’s metering infrastructure. The PowerApp, Hubtel explained, is only a small part of these expenditures.
Moreover, Hubtel emphasised that it has not, at any point, claimed to have received $25 million, as some commentators have suggested. The company pointed to its previous press release in March 2024, which made clear the cost structure of its agreement with ECG, and encouraged the public to verify these facts independently.
Another point of contention revolves around allegations that Hubtel is politically connected, with some critics asserting that its contracts with ECG are the result of undue influence. According to Hubtel, this claim is completely false. The company maintains that no shares of Hubtel have ever been held by a government official or any individual affiliated with a political party in Ghana. It further stated that Hubtel has not entered into any contracts with the government of Ghana, either directly or indirectly.
By distancing itself from the political sphere, Hubtel seeks to portray itself as a private, independently-run company focused purely on driving digital innovation in the country’s utilities sector. It underscores the importance of dispelling rumors that imply it benefits from political favoritism, which has clouded its reputation and the perceived integrity of its work with ECG.
Technical Expertise and Fees
One of the more technical aspects of the allegations suggests that ECG could have saved significant costs by simply purchasing APIs from Hubtel or other vendors and having its own engineers build the new commercial systems. Hubtel responded to this claim by explaining that such an approach is unrealistic and oversimplifies the complexity of the work required to transform ECG’s digital infrastructure.
Drawing an analogy from the payment processing industry, Hubtel compared the suggestion to purchasing APIs from a mobile money operator with the expectation of avoiding transaction fees. In reality, the payment processing industry, both in Ghana and globally, imposes inherent costs for services such as transaction processing, cloud infrastructure, and next-day settlement fees. These services were all part of Hubtel’s work at ECG.
Hubtel also addressed allegations that it collects 3% of every electricity unit purchased through its platform. It clarified that its actual fee is 0.95%, with the remainder of the transaction fee going to other stakeholders in the payment chain, including mobile money providers and card networks like Visa and MasterCard.
Revenue Impact and Contract Duration
Finally, Hubtel highlighted the significant positive impact its work has had on ECG’s revenues. Since the new systems went live in March 2023, ECG has experienced over 210% growth in monthly revenues compared to the previous year. Adjusted for the average tariff increase of around 80%, this still translates to a net monthly revenue growth of approximately 72%. This jump, Hubtel claims, is the longest sustained period of revenue growth in ECG’s history.
Contrary to the rumor that Hubtel’s contract with ECG spans 30 years, the company confirmed that the agreement is for a duration of five years. This relatively short-term contract structure, Hubtel argued, reflects the results-driven nature of the arrangement, which has already yielded tangible benefits for ECG.
In addressing these claims, Hubtel aims to restore confidence in its role in the transformation of ECG’s commercial operations. The company maintains that its work, guided by transparency and good governance, has helped the utility achieve unprecedented revenue growth at a fraction of the cost of past interventions. Hubtel’s defense underscores the broader challenge of navigating public perception amid ongoing reforms in Ghana’s utility sector.
Read Details of Statement Below:
CORRECTION OF FALSE CLAIMS ABOUT ECG COMMERCIAL AGREEMENT
Over the past few days, officials of some Civil Society Organisations (CSOs) and media commentators have sought to put out false statements about Hubtel’s work at the Electricity Company of Ghana (ECG).
Some of these false statements seem to be designed to totally discredit the work Hubtel has done in the recent transformation and record-breaking achievements in ECG’s revenue collection and commercial operations. Other false statements have also tried to paint the picture that Hubtel is part of a procurement scheme that has received payments for no work done.
The table below provides factual responses to these false claims and statements.
| False Statements by CSOs
G Media Commentators |
The Facts |
|
ECG has paid :25million to Hubtel for the PowerApp software. |
At the start of the project, $25million was only a figure set out as the cost limit by the Board of Directors of ECG.
Hubtel has NOT been paid $25million.
With the guidance of Hubtel and other third-party service providers, ECG spent about $12million of the $25million cost limit to replace old and obsolete systems that were causing severe revenue losses and frequent downtimes. These included the upgrading of its core databases from Oracle 10G to Oracle 19C, a new balance management and accounting system, hybridization of metering infrastructure, overhaul of staff systems for commercial operations, overhaul of customer self-service systems, overhaul of revenue protection systems and others. The new ECG PowerApp is only one of the cost lines within these expenditures. |
|
Hubtel has said it received :25million but ECG says it has paid GHS 171 million for the PowerApp. |
As mentioned above and also in our last press release following the signing of the agreement, some $12million (cumulatively amounting to about GHS 171 million) has been used so far to overhaul ECG’s old and obselete systems as part of this project. |
|
Hubtel has NOT quoted any where that we have received $25million from ECG.
That press release dated 28th March 2024 can be found at https://blog.hubtel.com/hubtel-announces- completion-of-commercial-agreement-with-ecg/ |
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Hubtel is owned by leading political official(s) and has several contracts with the Government of Ghana. |
At no point since the founding of Hubtel have any of the company’s shares been held or owned, directly or indirectly, by an official of any government institution or any person affiliated with any political party in Ghana.
Also, at no point since the founding of the company has it had any contract with the Government of Ghana. |
|
ECG could have simply bought the APIs from Hubtel or any other provider and had its own engineers build the new commercial systems. |
This is misleading and simply not practical.
It is similar to saying one can purchase payment APIs (from say a mobile money telco) so that they never have to pay transaction processing fees ever again.
It simply does not work like this within the payment processing industry in Ghana or globally. |
|
Hubtel gets 3% of every electricity unit purchased by customers of ECG. |
Hubtel does NOT get 3% of electricity bought by ECG customers.
For all merchants and retailers using Hubtel’s platform, we charge a fee of 1.95% on all transactions processed through our payment platform. 1% of this 1.95% is typically retained by the mobile money and card scheme providers, and Hubtel receives 0.95% as our fees.
This is no different in ECG’s case. Hubtel’s fee is 0.95%.
Other fees which are not part of Hubtel’s fees include fees retained by upstream payment providers such as mobile money providers, Visa and MasterCard, provision for metering cloud infrastructure, bank transfer charges and next day settlement fees to meet ECG’s demand to receive all collections within 1 day of processing regardless of the settlement period of the upstream payment scheme provider. |
|
The duration of ECG’s agreement with Hubtel is 30 years. |
The agreement is for 5 years. |
|
As of the time of this release a monthly average revenue growth of over 210% (compared to the revenues of August 2022) has been achieved as a result of the work being done by Hubtel and the new commercial system providers. |
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There has been no improvement in ECG’s revenues since Hubtel’s involvement. |
This is the longest-sustained record of monthly revenue growth in ECG’s collection history.
Even factored for the recent average increase in tariff of about 80%, there is still a significant net monthly revenue growth of about 72%; which is a record growth since the year 2001. |
| This significant jump in monthly revenues has enabled the ECG to become self-sufficient in meeting its obligations to key suppliers in the short-term. |
For the avoidance of doubt, the new commercial systems designed, developed, and implemented by Hubtel and other service providers have only been involved in ECG’s operations since March 2023. Therefore, attempts by some CSOs and media commentators to link our work to ECG’s past financial performance and legacy matters are completely misleading.
Hubtel remains a company deeply rooted in the ideals of good governance, transparency, and an unyielding determination to contribute to the development of the digital economy in Ghana. We wish to assure the general public that our service at ECG has been guided by these principles at all times.
We also remain extremely proud that after several initiatives and investments in the past (costing hundreds of millions of US dollars) aimed at improving ECG’s revenues, that Hubtel, a company founded and managed by Ghanaians, possesses the technology and expertise to transform ECG and set it on the path towards commercial profitability at a fraction of the past investments.
We urge the general public to disregard these misleading comments.