Hubtel, the Ghanaian fintech company which built the ECG Power App for revenue collection by the Electricity Company of Ghana (ECG) has denied being paid $25 million for the App.
This denial comes on the back of allegations by civil society groups and media commentators that Hubtel itself had claims that it was paid $25 million for the App, while ECG claimed it paid Hubtel GHS171 million.
Following these allegations among others, the Managing Director of ECG, Samuel Dubik Mahama, under whose watch Hubtel was contracted, has resigned and has been replaced.
But in a statement, copied to Techfocus24, Hubtel said that all of those claims by the CSOs and media commentators, plus other claims that Hubtel participated in some procurement fraud at ECG are all false.
“Hubtel has NOT been paid $25million,” the company said. “Hubtel has NOT quoted any where that we have received $25million from ECG.”
The company further explained that at the start of the project, $25million was only a figure set out as the cost limit by the Board of Directors of ECG, but with the guidance of Hubtel and other third-party service providers, ECG spent only about $12 million (GHS171 million) out of the $25 million.
It noted that the $12 million was spent on replacing old and obsolete systems that were causing severe revenue losses and frequent downtimes, and not just on the power app.
“These included the upgrading of ECG’s 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 expenditure,” the statement said.
3% fees on each transaction
Again there were allegations that Hubtel gets 3% of every electricity unit purchased by customers of ECG.
But the company categorically debunked that allegation, saying “Hubtel does NOT get 3% of electricity bought by ECG customers.”
It explained that for all merchants and retailers using Hubtel’s platform, the company charges a fee of 1.95% on all transactions processed through our payment platform. 1% of this 1.95% (more than 50%) 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%,” and not 3%.
The company further explained that other fees which are not part of its 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 one day of processing regardless of the settlement period by the upstream payment scheme provider, all of which have nothing to do with Hubtel.
Hubtel also flatly debunked the allegation that its contract with ECG is for 30 years, saying the contract is only for 5 years.
Revenue improvement
The critics of the Hubtel contract also claimed that Hubtel’s involvement has not yielded any revenue improvements for ECG. But the company laid out figures to debunk that allegation.
According to Hubtel, as of the time of putting out this statement, 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.
This, it said, 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 to meeting its obligations to key suppliers in the short-term,” it said.
Hubtel also pointed out that “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.”
On the claim that ECG could have purchased APIs from Hubtel to cut cost, the company said that suggestion is tantamount to saying that each company has to purchase mobile money APIs off telcos just to save cost, but things don’t work like that in the payment service industry both in Ghana and around the globe.
False political ownership allegation
Hutbel also debunk false allegations that it is owned by some politicians, saying “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.”
Hubtel said they are very proud of the work they have done at ECG and for the people of Ghana, adding that it 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,” it said.
