Hubtel clarifies $25 million payment claims in ongoing ECG modernization efforts

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To date, Hubtel asserts, ECG has spent approximately $12 million, well within this limit, to replace outdated systems and implement upgrades crucial to its commercial operations.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.

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.