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ECG-PSP Compact II: Ghana To Own 51%

As Gov’t Amends Concession Agreement

– By: Prosper Agbenyega

Government has amended the terms of the Private Sector Participation (PSP) compact agreement of the Electricity Company of Ghana (ECG) with the Millennium Challenge Corporation (MCC) to ensure that Ghanaians own at least 51 percent of the concession.
Under the Power Compact II Agreement, government is expected to allow about 80 percent private sector control in ECG for the country to benefit from a cash injection of about one billion US dollars over a period of 5 years.
But according to the President, government will stand by its decision to amend the Private Sector Participation (PSP) compact and allow that Ghanaians own at least 51 percent of the concession and also prevent involuntary layoffs as a result of the concession.
He mentioned that, government has stated in its Manifesto that it was going to take a second look at the ECG compact. “We are driven by two considerations: we are as concerned, as the workers, that the reforms should not lead to involuntary job losses and we should find a long term resolution to the nation’s electricity problems.”
“… Two, there should be no involuntary layoffs as a result of the concession,” he stressed.
He also stressed that “the term of the concession will be reduced from 25 years to 20 years”
President Akufo-Addo observed that the new terms will benefit Ghanaians and protect ECG workers, who have been nervous over the compact.
He made this assurance during the May Day celebrations in Accra.
Nana Akufo-Addo maintained that government wants more than the 20 percent control agreed by the former government, and that “We believe that these amendments meet the aspiration of Ghanaians in protecting the jobs of workers and ensuring the control and viability of ECG. We are as concerned as the workers that, the reform should not lead to involuntary job losses and we should find a long term solution to the nation’s electricity problem,” he said.
The President pointed out that, “In this regard, government has amended the terms of the concession agreement to require that: (1) Ghanaians own at least 51% of the concession; (2) there should be no involuntary lay-offs as a result of the concession; (3) the term of the concession would be reduced from 25 to 20 years. We believe that these amendments meet the aspirations of Ghanaians in protecting the jobs of workers and in assuring the control and viability of ECG.”
Under the Power Compact, six projects will be implemented to address the root causes of the unavailability and unreliability of power in Ghana
The project include ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.
The rest are Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.
The Government of Ghana signed the Ghana Power Compact with the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington on August 5, 2014.
Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.
The Ghana Power Compact would provide Ghana with a grant sum of four hundred and ninety eight million, two hundred thousand United States Dollars (US$498,200,000) to improve the performance of Ghana’s power sector, unlock the country’s economic potential, create jobs, and reduce poverty.
Close to US$350 million of the grant is being invested in ECG to make the country’s power distributor operationally and financially more efficient.
The Compact is being implemented by the Government of Ghana through the Millennium Development Authority (MiDA).
Meanwhile, Ghana will lose 498 million dollars from the US government meant to be an initial investment into ECG and other power generation companies if government misses the timeline.
Meanwhile, a Bidders Conference which was supposed to be held in Decemeber 2016 was postponed several times due to concerns raised by the Trades Union Congress (TUC).
It is not clear how much time Ghana has left but the Millennium Development Authority (MiDA) tasked to see the implementation of the compact has warned severally that Ghana is running out of time.

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