The financial health of the Ghana Grid Company Limited (GRIDCo) has taken a significant hit, with a staggering 99.5% reduction in profit before tax for the year 2021, leaving the company with a meager ¢1.296 million compared to the previous year’s profit of ¢270.704 million in 2020.
The decline underscores a concerning deterioration in GRIDCo’s core business. The 2022 Auditor General Report sheds light on the extent of the setback, revealing a 35.1% dip in Total Comprehensive Income, which stood at ¢197 million in 2021 as opposed to ¢304.113 million in 2020.
This downward performance is primarily attributed to the revaluation of the company’s property, plant, and equipment conducted during 2021. The financial repercussions of this revaluation were significant, as evidenced by the related tax burden amounting to ¢111.331 million in 2021, an exponential rise from the ¢17,725 million recorded in 2020. Moreover, income tax expenses ballooned to ¢142.625 million in 2021, a notable increase from the ¢88.425 million reported in 2020.
While there was a marginal 8.3% uptick in Total Income, amounting to ¢1.314 billion in 2021 compared to ¢1.213 billion in 2020, this was primarily attributed to an 8.8% boost in revenue from transmission services throughout the year.
On the expenditure side, GRIDCo experienced a substantial 39.2% increase in total expenditure, reaching GH¢1.312 billion from the ¢943.268 million recorded in 2020. This escalation was predominantly driven by higher impairment losses on trade receivables, amounting to ¢334.790 million, as well as increased Direct costs of ¢67.828 million compared to the previous year.
Turning to the balance sheet, the company saw a 9.8% surge in Current Assets, reaching ¢1.718 billion in 2021 from ¢1.565 billion in 2020. This uptick was largely attributed to a notable increase in cash and cash equivalents, amounting to ¢237.857 million.
However, Non-Current Liabilities saw a 5.7% decline, translating to ¢119.525 million, and culminating in a year-end figure of ¢1.991 billion in 2021 compared to ¢2.111 billion in 2020. This was primarily influenced by a reduction in Loans and borrowings.
Conversely, Current Liabilities experienced a substantial 24.6% upswing, equating to ¢484.928 million, reaching ¢2.452 billion in 2021 from ¢1.967 billion in 2020. This increase was propelled by significant hikes in current tax liabilities, loans and borrowings, and trade and other payables, growing by 74.1%, 57.4%, and 14.5% respectively.
Adding to the concerns, the current ratio for the end of the 2021 financial year stood at 0.7:1, compared to 0.8:1 in 2020. This stark figure signifies GRIDCo’s potential inability to fulfill its short-term financial obligations.