The Electricity Company of Ghana (ECG) is to be released on concession to a private company, yet to be named.
The Vice-President of the Department of Compact Operations, Millennium Challenge Corporation (MCC), Mr Kamran M. Khan, announced this to selected journalists at the United States Embassy in Accra, in a discussion on the status of the MCC Compact II.
He said the MCC “has received communication from the government to that effect”.
“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.
Mr Khan said there were companies around the world that had experience in writing those contracts and structuring them in such a way that “the public interest is protected; the interest of the government is fully protected and the assets remain within the ownership of the government.”
He said that it was the intention of the government to ensure efficiency in the distribution of power in Ghana.
“That’s the objective of the government so how do you make ECG more efficient and empower the staff to be more efficient and able to accomplish things that they want to accomplish? So there were a lot of options reviewed and the one selected and communicated to us is the concession”.
Confirmation
Meanwhile, the Minister of Power, Dr. Kwabena Donkor, confirmed the decision of the government to opt for a concession.
In a text message he said “this is not new; the President has stated it and I stated that as well”.
Later in a telephone interview, Dr. Donkor said the decision to go for a concession was based on the merits, including the fact that although there would be a private investor putting in money, the assets of ECG would still belong to the state.
Speculation
Speculations had been rife as to what the government intended to do with the ECG, which many admit, had underperformed over the years.
Many, including labour unions, strongly hold the view that the ailing company would be privatised, leading to job cuts; an opinion that the labour unions dread.
Others also hold the view that privatising the power distributor will 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.
According to Mr Khan, concession “is absolutely different from privatisation. It is not privatisation that has been selected as the option to provide efficiency in ECG. Concession is different from privatisation”, he added.
He explained that “concession is a contract that the government signs with a private company which comes in to make some investments in the operations of the entity. It comes in with a specific contract which takes account of the interest and concerns of all facets of society so that when the entity is operating under the concession it goes by certain operational standards.”
He stated that there were penalties if the concessionaire did not meet those standards.
“The main point is, it’s a contract for a number of years and after that, the assets are returned to the government and it has an option to continue or not but it is not privatisation”, he stressed.
Mr Khan also said ECG’s challenge had nothing to do with capacity, but providing proper management, good structure and good technology.
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 process because of the experience the government had with the Ghana Water Company Limited through under a World Bank funding five years ago.
Source: Graphic