The Chief Executive Officer of Africa Investments Limited, Dr Samuel Ankrah, has described the move by the government to release the state-owned Electricity Company of Ghana (ECG) to a concessionaire as a laudable idea which must be embraced by all.
Consequently, he asked management and members of staff and other civil society organisations opposed to the idea to reconsider their decision and rather back the process to ensure its success.
Dr Ankrah said this in an interview with the Daily Graphic in Accra as he expressed his opinion on how the release of state-owned organisations to the private sector would inure to the benefit of the people.
“We sometimes assume that when a state-owned institution such as the ECG is released to the private investor, we will be worse off because they are likely to charge higher tariffs beyond the pockets of many,” he said.
According to Dr Ankrah, that was not the case. He stated that the private investor will run the institution more efficiently, which will reduce his overheads and help him make profit, the margins he desires.
He said the private investor was also much likely to employ the right persons into positions that would result in higher quality of service.
“One other critical aspect of the whole thing is that, handing over state assets to the private investor will help to drastically or completely do away with government interference, which often cripples the organisations,” Dr Ankrah noted.
The ECG riddles
The release of the ECG forms part of the conditions that Ghana must meet before it starts accessing the $500 million dollar Millennium Challenge Compact Funds from the US government.
Meanwhile, speculations had been rife as to what the government intended to do with the ECG, which many admit had underperformed over the years, a phenomenon which has consistently resulted in poor quality of service.
However, many more groups and individuals including labour unions are vehemently opposed to the idea of the government releasing the state asset to a private investor.
They argued that privatising the power distributor would lead to a hike in electricity tariffs beyond the reach of the ‘ordinary man,’ adding to the already ballooning cost of doing business in the country.
Privatisation is often defined as the transfer of ownership, property or business from the government to the private sector.
The government ceases to be the owner of the entity or business under that circumstance.
But during his recent visit to Ghana, the Vice-President of the Department of Compact Operations, Millennium Challenge Corporation (MCC), Mr Kamran M. Khan, announced that the government had agreed to release the state power distributor to a concessionaire as part of measures underway to revive the ECG under the Millennium Challenge Account (MCC) Compact II.
“We think it is a good option,” he said, adding, “We do not have any technical issues with the decision of the government. We think it is a very reasonable option to apply.”
According to him, countries around the world had tried it effectively and gave an assurance that such arrangement could be done in Ghana to achieve the right results to transform ECG for it to deliver the required services to consumers.
Compact components
As part of the six components under the compact, there is the need for the government to improve the governance and management of ECG by bringing in a private sector operator and building infrastructure and foundation investments to reduce losses and improve service quality.
Much as this is seen as a laudable idea, many people are not confident about the current arrangement because of the experience the government had when the Ghana Water Company Limited was released under a management contract with AquaVitensRand under a World Bank funding many years ago.