Business News of 2014-07-30

ACEP backs private participation in the power sector

An energy think-tank, Africa Centre for Energy Policy (ACEP), has supported the proposal for a private sector participation in the power sector because it could inject efficiency in the operations of the power industry.

It, however, recommends that the government take the option of a management contract rather than trading the shares of ECG to private companies. The reform follows the country's qualification to benefit from the Second Compact of the United States Millennium Challenge Corporation with the Electricity Corporation of Ghana (ECG) and the Northern Electricity Company (NEDco) likely to receive major reforms.

A statement signed by Dr Mohammed Amin Adam, Executive Director of ACEP, however, urged the government to tread cautiously in view of its previous experience with private sector management players in the water sector. The statement urged the new management of ECG to position itself to attract long-term financing within three-years of signing the contract.

ACEP said ECG and NEDco must develop new performance and customer charters for quality service delivery and accountability. There should also be prudent tariff reforms set within transparent benchmarks as requirements to attract independent power producers to increase generation capacity.

ACEP encouraged the government to undertake operational and financial audit of ECG and NEDco to guide the benchmarks for the new contract. "This will ensure that government and the people will appreciate the enormity of the challenge in the power sector and the need to prevent the postponement of the proposed reforms," it said.

It enumerated ECG’s problems of low tariff and collection rates, large procurements with short-term financing and distribution losses, which needed to be redressed.