ACEP lauds power sector reforms

The Africa Centre for Energy Policy (ACEP) has commended the current reforms in Ghana’s power sector following the country’s qualification to receive the Second Compact of the United States Millennium Challenge Corporation.

Describing that as appropriate and timely, the energy think-tank indicated that the reforms will enhance government’s efforts at injecting efficiency into the operations of the power utilities.


A statement issued in Accra and signed by Mohammed Amin Adam, Executive Director said, “ACEP supports the proposal for a private sector participation in the Electricity Company of Ghana (ECG) and the Northern Electricity Company (NEDco).


“We, however, recommend that government should take the option of a management contract rather than trading the shares of ECG to private companies.” It also asked government to be comprehensive and transparent about the performance benchmarks that will constitute the terms of the contract in order to build public confidence in the policy.


It added: “The public apprehension about private sector participation in the downstream power sector is as a result of recent dubious Public Private Partnership (PPP) arrangements, which have eroded confidence in government partnering the private sector.”

ACEP noted that the main challenge facing ECG was financial viability. “We expect that apart from the grant from the US, the new management must put ECG in the position to attract long-term financing within three years from signing the contract. ECG’s debts are not only due to low tariff and collection rates but are also largely attributed to the large procurements by ECG with short-term financing.”


Furthermore, it said the new management must put the right mechanisms in place to reduce the distribution losses, improve on connection rate, metering and the general customer service. As required by regulation, it said ECG and NEDco must develop and publish new Customer Charters based on which consumers could hold them to account.


“Consumers demand for quality of service is a legitimate one and must be sustained. Private participation in the utilities therefore puts greater responsibility on PURC, which still has responsibility for tariff setting and quality regulation to rise to the challenge.


“Continuous tariff adjustments without improvement in quality of service will undermine consumer confidence in our utility institutions. The need to privatize ECG must therefore be complemented with tariff reforms set within transparent benchmarks,” it added.