Business News of Mon, 2 Feb 201511
ECG privatisation: Gov’t to select transaction advisor this month
Barring any last minute changes the government of Ghana will this month -February - select transaction advisors for the privatisation of state power distributor, Electricity Company Limited.
That is according to a high profile document intercepted by StarrFMonline.com.
The move follows a detailed research and analysis into the various options being considered by the Mahama-led administration in the management of ECG.
According to the report in Starrfmonline.com's possession and titled: Ghana Power Compact Private Sector Participation Options Study for ECG: “The Government of Ghana has decided to focus their Private Sector Partner (PSP) choice [for ECG] on either a partial privatization or a concession contract.”
The intercepted classified document, which was prepared by the International Finance Corporation (IFC) was commissioned by the government of Ghana represented by the Ministry of Energy, the Millennium Development Corporation and the World Bank.
Starrfmonline.com understands the private partner for ECG “is expected to strengthen and improve corporate governance and management, invest in needed infrastructure to expand services, reduce losses, and improve quality of service delivery.”
The government of Ghana, according to Starrfmonline.com’s highly placed sources in the corridors of power, is more likely to opt for partial privatisation since a concession contract can take two years or more to complete and “with election next year the government would not want to drag this beyond that.”
With partial privatisation, “the Government sells shares in ECG to a private partner and retain partial ownership of the company. While the government will still be a part owner of the company, the private partner will be responsible for operating and managing the company, as well as investing in upgrades critical to improving services,” the document stated.
However, with concession, “the Government will enter into an agreement with the private partner where the private partner will have the exclusive right to operate, maintain and carry out investment in ECG for a given number of years. The Private Partner will have the responsibility over the operation and maintenance of all assets and investment during the period, but the government will remain the sole owner of ECG. Once the concession expires, the government will assume total control of the company. The number of years under this concession option is typically around 20 to 30 years.”