Electricity for all to end as MCC wants expansion halted under compact

Business

May 30, 2017

Source: Richard Annerquaye Abbey/thebftonline.com/Ghana

The country’s desire to ensure universal electricity access by 2020 is likely to suffer a severe blow when ECG goes under private care, as the Millennium Challenge Corporation (MCC) wants further power expansion projects halted.

A feasibility study conducted by the MCC, on behalf of government, as part of the process to have private sector participation (PSP) in the power distribution sector, noted that ECG cannot be efficient if it still continues to expand power supply wholesale.

The report prepared by the U.S. Army Corps of Engineers (USACE), CH2M HILL, and NRECA International Limited said the Millennium Challenge Account second compact, which focuses on improving ECG’s efficiency, is at odds with government focus on expanding electricity access.

“While an improvement in access is an important social goal, the single-minded pursuit of expansion needs to be curbed to allow ECG management to focus on improving efficiency if the current emphasis on investment for expansion continues, the company’s deficit will continue to increase at the same rate as its customer growth,” the report said.

With six companies shortlisted for the Private Sector Participation (PSP) role in the electricity distribution business of ECG, the feasibility advised that investing growth without improving corporate efficiency is more detrimental to ECG than not investing at all.

Data available indicates that electricity coverage stands at about 80 percent of the population and government has signed onto different projects to ensure that the entire country has access to power by year 2020.

According to the feasibility study, conducted a little over two years ago, improving efficiency of ECG is hinged on the adoption of a regional integrated loss management to drive change.

“Without a comprehensive and focused loss management programme driven at the lower levels, it is doubtful that the ECG will be able to make the cultural shift required to achieve the aggressive loss targets needed to meet the growing demand to ensure sustainability.

Loss management, particularly control of non-technical losses and improvement of collections, needs to become the most important consideration for the board of directors and senior management, with resources and funds allocated to areas that will result in the highest efficiency improvement,” the report said.

ECG concessionaire to announced next year

Chief Executive Officer of Millennium Development Authority (MiDA), Ing. Owura Safo, speaking at a recent Bidders Conference said: “It is our expectation that bids would be received by October 2017 and a Concession agreement signed with the selected Concessionaire by March 2018.

That way the ECG PSP transaction can reach financial close by early September 2018 so the Concessionaire can commence in earnest the management, operation, and investments in ECG by October 2018. To enable us achieve this timeline, we will require the corporation of all stakeholders.”

He added that: “The ECG Financial and Operational Turnaround Project aims to strengthen the governance and management of ECG by bringing in an acceptable concessionaire to make investment designed to reduce technical, commercial, and collection losses and improve service quality.

MiDA continues to work together with all stakeholders on this journey of identifying the best qualified private sector partner for ECG. This partnership will transform the ECG in terms of technology in power distribution. Let us seize the opportunity together to improve the power situation in our dear country.”

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