September 6: D-day for ECG concessionaire decision

Government has up to September 6, to select a concessionaire to manage the state-owned Electricity Company of Ghana (ECG) under the Millennium Challenge Corporation (MCC) Compact II.

Mr. Kenneth James Miller, the Resident Country Director of the MCC, said: “We have September 6 this year for the Government of Ghana to pull a specific trigger on the ECG Concession on a private firm to partner Ghanaian partners.

If the date is not achieved, the way the Compact was negotiated between the two governments, US$ 119 million dollars would be pulled back from the table.”

Ghana signed the Power Compact with the United States of America, acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, at the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.

The Ghana Power Compact would provide Ghana with a grant sum US$498,200,000 to improve the performance of Ghana’s power sector, unlock the country’s economic potential, create jobs, and reduce poverty.

About US$350 million of the grant is to be invested in ECG to make the country’s power distributor, operationally and financially more efficient.

A first bidders conference was held in September last year, and it is expected that bids would be received, and a concession agreement signed with the selected concessionaire soon.

Meanwhile, six companies have been shortlisted for the concessionaire arrangement. They are Tata Power Company Limited from India; Manila Electric Company from the Philippines; Ch Group Ghana with EDF and Veola Sa with Ghanaian address – Engie Services; SA from France, BXC Company Ghana Limited, registered and operating in Ghana; and Enel S. P. A. of Italy.

Mr. Miller said the commitment of the Government of Ghana would go a long way in ensuring the successful implementation of the Compact.

“We need to focus on it if this is really a priority for Ghana and everyone has to get involved and make things quicker with urgency,” he advised.

ECG’s challenge

The ECG, the main power distributor, has had challenges accounting for the amount of power it receives from power producers.

This has been attributed to government and quasi government institutions’ refusal to pay their bills. Technical losses and theft, which remain relatively high, are the other challenges.

The age-old problem has led to the accumulation of debt by power producers, the transmitter-Ghana Grid Company Limited (GRIDCo), and the distributor.

The Akufo-Addo-led government has committed to clearing the about GH¢10billion energy sector debt using ESLA Plc – a special purpose vehicle created for the purpose. About GH¢4billion was raised last year to pay for part of the energy sector debt which threatened the collapse of a handful of banks that had advanced credit to power sector players.

Government is expected to raise an additional GH¢6billion in March to clear the bulk of the GH¢10billion energy sector debt.

Kweku Andoh Awotwi, the Volta River Authority (VRA) Board Chairman and energy expert, told the B&FT in an earlier interview that: “ECG must run efficiently. Gov’t through the MCC is looking for the ways in which ECG can run efficiently. Every other utility must run efficiently; but if the people who collect the money don’t collect it, there is no money for anyone – so they are very important.”

“I believe the millennium exercise is a good way to make ECG efficient. Is it the only way? No! But if we had come up with a way, we wouldn’t need someone else to tell us a way. It is what we have in front of us. We have signed up for it, and we have got to make sure the terms and conditions are not harmful to us. If we design it properly, that private partner concessionaire will have the proper incentive to make ECG run efficiently,” he added.