The Millennium Development Authority (MiDA) says the search for private participation in the management and operation of the Electricity Company of Ghana ECG) is primarily aimed at attracting the much-needed investment in the utility company and not as a result of inefficiency on the part of the power distributor.
The Chief Executive Officer of MiDA, Owura Kwaku Safo, said it was on record that the distribution segment of the power sector required about $200-million investment every year for a number of years, a responsibility the government alone could not shoulder.
Mr. Safo said this at a news conference in Accra yesterday to interact with the public on its road map and some achievements that had been chalked up since the second compact, the Ghana Power Compact, was signed in August 2014.
Currently, he said, the transaction advisor was working on the structure of the transaction report which would form the basis for a tender document to invite proposals from interested investors.
Mr. Safo noted that local companies with proven track records could participate in the process.
“We urge all interested parties, particularly Ghanaian indigenous companies, to take up the challenge and quickly submit their letters to express their interest in this venture,” he added.
He said the Ghana Compact two programme, which was also called the Power Compact, was to be a major catalyst that would contribute to the development efforts of Ghana.
That, he said, was because it would, in the medium term, address the root cause of power outages in the country which had had such a debilitating effect on the economy.
“We at MiDA are excited that through the interventions to be initiated under the compact two programme, we can play a critical role in banishing the frequent power outages from the power landscape in Ghana in the medium term, so that it does not rear its ugly head again in the future,” he said.
He said the second compact, which comes with a $300-million grant, would address six projects that had been identified under the compact.
Projects under compact
Projects under the compact include financial and operational turnaround projects for the ECG and the Northern Electricity Development Company (NEDCo), the project to address access to power and a project to strengthen the capacity and regulatory framework of the power sector.
The rest are the power generation sector improvement and the energy efficiency and demand side management projects.
Mr. Safo said the general outcomes of the project included reforms in the power distribution sector to encourage and attract independent power producers.
That was expected to increase generation and improve reliability of the distribution system, he added.
The distribution sub-sector alone, he said, needed average investments of US$200 million a year to build a robust system, funding of which the government alone could not shoulder, hence the need to partner the private sector to inject some fresh capital.
It would also ensure the provision of reasonably priced fuel in sufficient quantities for power generation, he explained.
The CEO of MiDA explained that the compact spelt out how to process the country’s gas resource and make it available for power generation, while at the same time building the eco-system for the increased use of liquefied natural gas (LNG) to augment local gas, where necessary.
Private sector participation
The compact implementation stakeholders, including MiDA, the ECG and the Ministry of Finance, explained that the power sector needed investments and the government had decided to partner the private sector to bring in that investment.
“And somebody bringing in money would want to have control of how it is used and invested. Therefore, it is not a question of efficiency on the side of the ECG. Rather, it’s a question of the private sector partnering the ECG in the distribution centre and improving quality,” Mr Boakye Appiah of the ECG stated.
Source: Graphic