Business News of Wed, 24 May 20176
We need power to turn economy around – Agyarko
The Minister for Energy, Boakye Agyarko has underscored the need for the sustainable management of the state power company to forestall a total collapse.
He was speaking at the first Bidders’ Conference on the concession for the Private Sector Participation (PSP) in the electricity distribution business of the Electricity Company of Ghana (ECG).
The Bidders’ Conference is to facilitate interaction between the shortlisted applicants for the ECG Concession and potential local and international investors.
He reminded the power sector remained central to the development agenda of the government and “key to unlocking the development potential of Ghana.”
But the Energy Minister lamented that “years of inadequate investment, inefficiencies within the utility, and a large stock of outstanding receivables, particularly in the distribution sector, have all conspired to weaken the organisations in the sector to what they are today.
As a nation, we should set our sights firmly on turning around the fortunes of this strategic sector which so many of us have poured our sweat into building.”
Highlighting the negative impacts of the power crisis, Mr. Agyarko noted that the power crisis, per the 2013 World Bank Energising Economic Growth in Ghana report, the 2006-07 power crisis cost Ghana nearly 1 percent in lost GDP.
Also, the Institute of Statistical, Social and Economic Research (ISSER), in its 2014 study on the economy indicated that Ghana lost production worth $2.1 million per day during the crisis. Mr. Agyarko further noted the impact of the power crisis on unemployment figures.
“For the government, even more critical is the resulting loss of jobs that was precipitated by the unreliable power to business. Recognising this fact, President Nana Akufo-Addo, during the 2017 State of the Nation Address, warned that if left unaddressed, the challenges in the energy sector would collapse the Ghanaian economy.”
About the ECG PSP Transaction
The Government of Ghana signed the Ghana Power Compact with the Millennium Challenge Corporation (MCC), an independent United States government foreign aid agency, on August 5, 2014.
The Ghana Power Compact provides Ghana a grant of US$498,200,000 to improve the performance of Ghana’s power sector to unlock the country’s economic potential, create jobs, and reduce poverty.
The Government of Ghana is committing at least US$37.4 million of its own money.
The main project under the Ghana Power Compact is the ECG Financial and Operational Turnaround Project, which is designed to transform ECG into an efficient and financially strong institution through private sector participation (PSP). About US$351 million of the MCC grant is being invested in ECG.
The project seeks to bring about private sector participation in investments into, as well as the management and operation of, the ECG through a concession arrangement.
Under the concession, a private partner will invest in ECG and improve its operations to reduce commercial and technical losses, reduce the frequency and duration of outages, introduce new equipment and technology, and reduce the vulnerability of the distribution system to theft and meter manipulation.
The Compact is being implemented by the Government of Ghana through the Millennium Development Authority (MiDA).