ECG losing $8 million weekly

BY: Edmund Smith-Asante

The Electricity Company of Ghana (ECG) is currently losing about $8 million in its operations due to poor infrastructure, billing and transmission losses, the outgoing US Ambassador to Ghana, Mr Robert Porter Jackson, has stated.

He, however, believes that the fortunes of the ECG will improve with new management (concessionaire), infrastructure and the infusion of money from the Millennium Challenge Account (MCA) Compact Two.

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“ECG is still losing approximately $8 million a week. That is clearly not sustainable, but I think with different management and new infrastructure which will go with it and a huge infusion of cash both from the Millennium Challenge Corporation (MCC) and the private sector investor, we can see the number of people with reliable power going up and cost coming down,” he said.

He added that, “the employees of the ECG have been guaranteed employment in the first five years of the concession, by which time we think the company would be more profitable and probably looking to hire more people according to our calculations.”

Mr Jackson, who was commenting on the vexed issue of the ECG’s privatisation in a farewell media encounter last Tuesday (July 24), said his expectation was that Parliament would approve the management of the ECG by a private company from the Philippians which had won the concession agreement.


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Expressing his excitement about the prospect, he said while power supply had become much more reliable over the last three years, there was still the problem of affordability.

Parliament approves concession

Meanwhile, Parliament on Friday approved the concession agreement between the government and a consortium of investors led by the Manila Electric Company (Meralco) for private-sector participation in the Electricity Company of Ghana (ECG) within the terms of the second Millennium Challenge Compact (MCC).

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Under the agreement, the concessionaire will have the right to operate and expand the power distribution network.

There is also a bulk supply agreement by which the ECG will sell power under a portfolio of public/private agreement, while the rate the concessionaire will charge for power will be determined by the Public Utilities Regulatory Commission (PURC).

Billing, transmission losses

Speaking to the subsidisation of electricity by GH¢800 million by the government of Ghana and how that impacted on electricity generation and distribution, he said, “At present,the ECG is not only losing $8 million a week (part of that is that it only approximately collects 65 per cent of what it bills), moving to more prepaid meters which the Millennium Challenge Corporation will be financing and the Millennium Development Authority will be procuring will help with the collection issue.”

Stating that the ECG was currently losing 24 per cent of the electricity that was produced before it ever reached businesses and houses, he said, “We are confident that the new infrastructure, the new lines, the new sub stations in particular that we put in place will bring the losses of power produced and loss in transmission below 10 per cent.

“So that additional 14 or 15 per cent available electricity will also make the company more profitable and should reduce the need for subsidisation.

Conflict of interest

Responding to a suspicion that the Filipino consortium was given the concession because the United States was not comfortable with the other shortlisted Chinese company and so influenced the selection, Mr Jackson said the Chinese failed to disclose that it was working with the ECG.

“My government regarded it as a conflict of interest. So we made the people involved in the selection process aware of our concerns about conflict of interest,” he stated.

He said he believed that the Filipino company was selected on merit, but the Chinese company had gone to court.

“But I want to be very clear. We have no problem working with a Chinese company. It is not because it is a Chinese company that it didn’t get the bid. It is because of the conflict of interest that existed that we had concerns. Chinese companies are very active in the American market so we are pleased to work with Chinese companies when they operate transparently and on equal footing around the world,” he declared.

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