Minister charges new managers of ECG to work towards KPIs or get kicked out
After 50 years of operating as the sole power distribution utility company in the country, the Electricity Company of Ghana (ECG) has transferred its assets to Power Distribution Services (PDS) Ghana Limited to be the electricity service provider in the southern distribution zone of the country.
The historic takeover of the assets of the ECG is under a 20-year concession agreement under which PDS is expected to inject $580 million into the distribution system in the first five years of the agreement period.
The government, however, cautioned PDS that it would lose the concession if it failed to achieve the key performance indicators (KPIs), which included reducing high electricity tarrifs and replacing obsolate equipment.
Delivery of power
The PDS is also expected to strengthen the governance, management and operations of ECG by improving the delivery of power to end users to support the socio-economic growth of Ghana.
The ECG will, however, continue to operate as a bulk energy trader and asset owner by ensuring that the network is operated and maintained according to international prudent utility practices.
At a ceremony in Accra yesterday to transfer the assets, the Senior Minister, Mr Yaw Osafo-Maafo, said Ghana had embarked on a journey in its quest towards an improved and more efficient and effective power sector through the deepening of private sector participation.
He said according to the concession agreement, PDS would invest $580 million over a five-year period and continue with the investment yearly throughout the period of the concession.
Mr Osafo-Maafo said a larger portion of the Millennium Challenge Corporation (MCC) funding of $535.7 million would also flow into the power sector, adding that the concession had earlier been planned to 25 years and had guaranteed workers’ jobs for only five years after the transfer.
However, he said, the President changed the duration of the concession to 20 years and gave at least 51 per cent of the company‘s ownership to Ghanaians.
Again, the President made sure the job of every person employed at ECG was guaranteed so long as they chose to remain at ECG, he added.
For his part, the Minister of Energy, Mr John-Peter Amewu, warned that if PDS failed to achieve the KPIs, Ghana would repossess the management of the ECG.
He said the challenges faced by the ECG were many and expressed the hope that PDS would achieve the collective mandate of providing quality, safe and reliable electricity services to support economic growth.
Mr Amewu pledged his ministry’s support to the partnership which he said would go a long way to reduce power theft, technical and commercial losses and make power consumption affordable to consumers towards achieving the industrial revolution agenda.
The energy minister warned that government would no longer entertain fraudulent power transactions, which could compel the country to pay penalties and, thus, cited previous experiences whereby the state had to spend between $25 million and $30 million for “bad power deals”.
The Minister of Finance, Mr Ken Ofori-Atta, said one of the major constraints to the country’s development was insufficient and unreliable power, hence the welcoming news by the Ghana Power Compact, through the benevolence of the United States Government, acting through the Millennium Challenge Corporation.
The Chairman of the ECG Board, Mr Kelly Gadzekpo, said in arriving at that milestone, much hard work was done in the process by all the stakeholders.
He said the ECG had not been sold, as was being speculated in some circles; rather, the company would continue to exist as a going concern but with a new business focus as a dynamic and formidable market player in the electricity industry, both locally and in the West African sub-region.
The United States (US) Ambassador to Ghana, Ms Stephanie S. Sullivan, said now in its third year of implementation, the Ghana Power Compact was the largest US government transaction under the Power Africa Initiative.
She said the compact was unique in its purpose to help restructure the Ghanaian energy sector through true private sector participation and gave an assurance that over the remaining two and a half years of the compact, the MCC would continue to invest millions of dollars in the sector.
Ghana beyond aid
Ms Sullivan said the US was committed to fully supporting Ghana in its immensely ambitious, complex and transformational agenda to move Ghana Beyond Aid, adding that the concession had been structured with the interest of Ghana’s present and future at heart.
The Managing Director of the ECG, Mr Samuel Boakye-Appiah, underscored the need for intensive change management on both sides of the ECG and PDS, as 50 years of operating as a distribution utility in the difficult and dynamic environment could not be wished away.
He said there was the need for mutual respect and learning from each other, as the real work of building the two companies would require cooperation and partnership from both companies, as well as the oversight ministries, regulators, power suppliers and all stakeholders in the electricity sector.
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