Ghanaians are expected to see improved performance, reduction in current losses of Electricity Company of Ghana (ECG), as well as lowering of electricity tariffs when a concessionaire (private investor) takes over the operations and management of the nation’s power utility company.
The Chief Executive Officer of Millennium Development Authority (MiDA), Ing. Owura Sarfo, who gave the assurance, told Editors in Accra that by the third quarter of next year, a concessionaire would be in place to handle the operations of ECG and inject more capitals into its operations.
“If ECG was able to reduce its cumulative losses, which stand at 35 per cent, by half, it would be making US$150 million every year and this should facilitate progressive lowering of tariffs,” he lamented.
“The energy’s sector problems have been tackled under the public management for years but have not been resolved. On the contrary, performance has been declining,” Ing. Sarfo added, explaining that, increasing private sector participation in the sector holds promise for improvement in operational and financial performance of the utility.
He said it would further increase employment opportunities for men and women, and explained that because the power crisis, popularly called ‘Dumsor’ was negatively affecting the operational capabilities of industries and small-scale businesses, the new arrangement under the partnership would increase power supply to its customers.
“In that position, the nation stands to attract investors, while industries and all other entrepreneurs get the opportunity to employ more hands and also open the chance for a greater number of people to become self-employed under the Power Compact.”
The MiDA CEO explained that under the agreement signed between Ghana and the United States governments in August last year, the Millennium Challenge Compact Two provides Ghana with a grant of US$498.2 million to improve the power sector, which is also called the ‘Power Compact’.
According to him, the major project under the Ghana Power Compact is the Electricity Company of Ghana (ECG) Financial and Operational Turnaround Project, which is designed to transform ECG into an efficient and financially strong institution through private sector participation (PSP).
The ECG Financial and Operational Turnaround (EFOT) Project entails private sector participation in ECG, modernising utility operations, reduction in commercial losses and improvement of revenue collection rates, technical loss reduction and outage reduction.
About $300 million of the MCC grant is being invested in ECG, and the Government of Ghana is committing at least US$37.4 million of its own money.
The project seeks to bring about PSP in investments into, as well as the management and operation of the ECG through a concession arrangement.
It is expected that the private investor would manage and integrate the possessions of the state-owned power distributor from year 2017 for a period of 25 years.
No job cuts at ECG after privatization
The CEO of the MiDA has reiterated that if a concessionaire takes over the management of the company in 2017, there would be no job cuts at ECG.
Mr. Sarfo claimed that job of every single staff member is protected because ECG is not overstaffed.
“Fifteen percent of ECG staff will go on retirement in the next five years, paying the way for more Ghanaians to be employed,” he assured.
Law suit against MiDA
Meanwhile, MiDA has described a suit filed against the Power Compact II which seeks to privatize part of the Electricity Company of Ghana as lacking merit.
A member of the opposition New Patriotic Party’s (NPP) communications team, Saaka Salia sued MiDA, arguing that it is not fit to participate as an adviser, in the concession arrangement for the ECG. Joined to the suit was the PURC, the Attorney General’s office, and Energy Commission.
Mr. Salia further argued that MiDA breached Ghana’s laws after it authored and circulated a draft tariff methodology.
But reacting to how the suit will affect the implementation of the project, the Chief Executive Officer of MiDA, Ing. Sarfo admitted that the authority has been served with the suit, but sees it as incompetent.
“We have been served a copy of the suit. I will not go into the merits of the case because the case is in court. But all I will say is that that suit is incompetent, that suit is of no merit and that suit is totally false,” he said.
According to him, the allegations set in the suit are false, since MiDA has undergone all the necessary requirements and legal procedures needed to bring the Ghana Power Compact II into force.
“At the appropriate time as we go through it we will demonstrate that what I have explained to you is so. MiDA is a reputable company, MiDA is a transparent company, MiDA is guided by rules and regulations and therefore what has been laid out is completely false,” he stressed.
He was also optimistic the suit will have no effect on the implementation of the project.
By John Kelly
