MiDA justifies release of ECG on concession
A Director at the Millennium Development Authority (MiDA), Mr Mawuli Rockson, has justified the need for the country to release the Electricity Company of Ghana (ECG) on concession.
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According to him, the move would provide the needed support and resource to revamp the power sector and halt the energy crisis in the country.
Mr Rockson, who said this at the West African Mining and Power Conference (WAMPOC 2016), in Accra, indicated that unless the distribution of utility was done on sound commercial principles, the sector’s investments would not be sustained.
The event, on the theme: “Sustaining Mining and Power Investments: Meeting Stakeholder Expectations in a Challenging Global Environment”, brought stakeholders to deliberate and improve on issues affecting mining and the power sector in Africa.
Compact II
He said presently between US$8 to US$12 billion was required for new power generation plants in the next 10 years, but noted that the government alone could not meet that funding requirement.
Per the Compact II of the Millennium Challenge Account signed by the government in August 2014, the ECG is set to be released to a private company for about 25 years.
Among other things, the move seeks to ensure reliable power supply for domestic and industrial use, improved transparency and independence in the setting of regulated tariffs by the Public Utilities Regulatory Commission (PURC), and improve ECG’s credit worthiness to enable it to acquire additional generation capacity from the IPPs without or with limited recourse to government guarantees.
However, many people, including workers of the ECG, have viewed the move as a privatisation of the country’s main power distributor and have subsequently kicked against it.
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Clarifying the issue of privatising the ECG, he said by releasing the company on concession, the government was only transferring to a private sector operator its operational control of the distributing business in ECG.
“Ownership rights continue to reside with the public authorities to save operation and development rights. However, the concessionaire operates and manages the assets on behalf of the government and gets paid through tariffs allowed by the regulator,” he said.
He said due to challenges in the power sector during the 1970’s to early 1980’s, the government commissioned a private global research firm SYNEX of Chile to conduct a study into Ghana’s power sector.
Key among the finding was that distribution was the weakest link among the power supply value chain in the country, hence a technical and financial sound distribution subsector is very important to the viability of the power sector.
The director said the PSP, as the sole power distributor, was essential to solving the power problem in the country once and for all.
He indicated that an acceptable PSP provider had the added advantage of relatively easy access to investment capital, thus helping to solve the investment problem.
“With sound technical and financial capability, the PSP should implement modern utility management and operational systems,” he said.
Changing the status code
Mr Rockson said, “the availability of reasonably priced quality power was a pre-requisite for national development but if the country does nothing different about the present situation, with power, we would get the same unacceptable results we have always gotten”.
According to him, the best remedy was to attack the root causes of the challenges we have with power. Compact II addresses the root causes of the energy challenge.
He added that the country had been presented with a credible solution under the Compact II programme to the problem, saying let’s all work together to make it a reality.