Owned by the government of Ghana, the Electricity Company of Ghana (ECG) as a limited liability company was incorporated under the Companies Code, 1963 (Act 179) in February 1997. It began as the Electricity Department on 1st April 1947 responsible for distribution of power in the entire country; transmit, supply and distribute electricity.
ECG later became the Electricity Division in 1962 that was subsequently converted into the ECG by (NLCD 125)in 1967. But in 1987, the Northern Electricity Department (NED), now NEDCO (Northern Electricity Distribution Company) whose responsibility is to procure and distribute electricity in Northern part of Ghana, was established under the Volta River Authority (VRA), to take over from ECG.
The Energy Minister, Boakye Agyarko addressing the media after a draft of the concession agreement has been completed and approved by Cabinet pending approval in the Floor of Parliament on July 10, 2018 said, “when the energy sector reforms were mooted in 1995, this was the direction sought to take the country. He stated that, “Had we been bold to take that path in 1995, my prediction is that the concession period would have been over by 2015 and ECG would have been in a far better place than now; and the supply of electricity to our consumers and citizens would have been in a much better, more stable condition than present.” Meanwhile, the Speaker of Parliament, Prof. Mike Oquaye, has referred the concession agreement to the Mines and Energy Committee of the House for consideration and report.
In a related development, Parliament on July 24 approved the concessionaire.The concession agreement is between the Government of Ghana; ECG and a consortium of investors led by Manila Electric Company (Meralco), a Private Sector Participation (PSP) and is due to take effect on February, 2019. On becoming effective, the second tranche of US$192m funding will be released to ECG to tackle very critical and important infrastructural development. But more importantly, the Ghanaian participation component will be increased from 20% to 51% as the period of the concession will be reduced from 25 to 20 years. The concessionaire is said to operate under a new name as tariffs are also expected to be set by the Public Utility Regulatory Commission (PURC) and not the concessionaire, so as to be kept affordable for citizens.
Meanwhile, Minority in Parliament has warned consumers to be prepared to pay more for power. The Minority has question the capacity of the Meralco and it’s local partners to effectively manage ECG. Former Deputy Power Minister, John Jinapor, said “my worry is that some of this companies have no track record in the Energy sector and cannot tell us what they have done in the sector to support Meralco to manage the concession”. But the Energy Minister in his response told Parliament about how workers at ECG are excited about the current arrangement. He said through negotiation the parties have agreed to first 5years employment as the first option for the workers. He also said ” finally, we came to the term which stated that there shall not be any involuntary layoffs during the entire period of the 20years concession. On the average the ECG worker is 52-years-old and they are being given a 20-year lifeline to work”
But, African Center for Energy Policy (ACEP) and The Public Utility Workers Union (PUWU) disagrees with the Minister speaking at the sidelines on Citi News. ACEP demands that the ECG concession agreement should be probe. They claim that Meralco consortium, which was selected by the Millennium Development Authority(MIDA) to manage ECG, did not fulfill the 51% local content requirement before it’s approval. According to the Executive Director of ACEP, Benjamin Boakye, “We realised that the company, Meralco has not really satisfied the local content requirement of 51% but they eventually emerged as the winner and were subsequently allowed to put together a consortium to take over ECG. That raises fundamental questions because through the request for qualification, there was specific criteria to be met by any company that was interested in ECG. But if we now have a consortium that did not go through that process how do you satisfy that” he said. According to Mr. Boakye, it is vital that the companies are thoroughly screened to ensure that they are financially and logistically capable of managing the country’s premier electricity distribution company.
PUWU also accused MIDA and Government for excluding them from the Evaluation Panel during the last round of negotiations that led to the selection of the concessionaire, Meralco. The General Secretary of PUWC, Michael Adumattah Nyantakyi, said they find this very strange. “This whole process, we learned that ECG which is the subject of the whole concession was not even represented on the evaluation panel. So we think something is very wrong because the people who are the asset owners, those whose assets you are going to give out to a concessionaire does not have a say or even appraising who is going to take over the asset.” he said.
Meanwhile, the Energy Minister retorted that “we are better for them; the arrangement will certainly accrue to the benefit of Ghanaians.” He said “By January 25, 2019, all parties must fulfil all their conditions precedent to transferring the operations and February 1, 2019, is the expected transfer date when the concessionaire takes over operations of ECG”. Mr. Agyarko further revealed that under this agreement the private partner will invest some US$580million into the distribution system during the first five years, while the US government also invests US$498million”. Also, the brand ECG will remain a Government entity but the concessionaire has decided to adopt a new name thus, Power Distribution Services Ghana Limited; ECG reformed or shrunk down or whatever will still be ECG; they own the trademark he said.
According to checks of Business Day, the Memorandum of Understanding (MoU) is in the process yet to be signed by the Energy Minister; acting on behalf of government, and officials of Meralco which will enable the transaction to become effective by August 2, 2018.
The Government of Ghana in its quest to restructure and streamline the operations of the power distributor; ECG disclosed that it is going to allow private sector participation to allow the national power distributor make profit and provide quality service to its clients. Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.
In 2008, the Government under the leadership of the Former President, John Agyekum Kufour sold 70% of Ghana Telecom for $900million to Vodafone. The Fomer President has justified that he feels vindicated now. “There was a lot of criticism when it was decided to give, if you like, the concession to Vodafone; thankfully, within the past 10years I believe by the step we took, has been vindicated with such a panache that now as I sit here I feel a bit like a seer, a prophet” the Former President said speaking at the 10th Anniversary Dinner of Vodafone Ghana. Also, in 2013, Ghana Industrial Holding Company (GIHOC), Distilleries Company Limited was privatized during the tenure of Former President, John Dramani Mahama’s tenure. The State Transport Company(STC), now Intercity and Nsawam Cannery are all victims of concession agreements.
Prince Schroeder
