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General News Wed, 8 Jun 2016

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‘Fixing’ ECG means privatization – Group to Mahama

The Civil Society Platform on Oil and Gas had said it is opposed to attempts by the government to privatize the Electricity Company of Ghana (ECG).

President Mahama had earlier insisted that government had no plans of privatizing the state-owned company, but he somewhat made a u-turn when he defended government’s attempt to privatize the company at the opening ceremony of the 2016 edition of African ICT and Mobile expo, MOBEX .

The President explained that the move is necessary to make the company more efficient.

Defending his claim with examples, President Mahama explained that government had to similarly deregulate the telecommunication network, Ghana Telecom [now Vodafone Ghana] years ago because it was not working.

“Those were some of the “chimeras” that were pulled out of the box because we were going to privatize and allow private participation. Today, I can see a similar development of the inefficient downstream distribution system on the electricity and power front. We are trying to do reforms and they are being drawn out.”

“People may argue that Electricity is so important that it must be monopolized by the state. Why are you allowing private sector in; but we have had this system for years, and it’s not working. If it’s not working, we fix it.You fix a situation by taking risks. It is a risk we took when we deregulated telecommunications. If you are not ready to take risks then the world is not ready to make progress,”said the President.

But the civil society platform in a sharp rebuttal emphasized that “the type of privatization that hands over the management, and sometimes the assets of public companies to private entities often referred to as ‘strategic investors’, have never ever worked in this country.”

“We agree with the President when he suggests that we must fix ECG’s problems, but we find it a bit strange, that he attempts to equate “fixing the problem” with privatization. Our understanding of “fixing the problem with ECG” is doing what Mr. Kwame Awuah Darko has done with the Bulk Oil Storage and Transport (BOST) and what he is currently doing with the Tema Oil Refinery (TOR), but not the easy option of privatization,” the group added.

Details of the statement are below

PRESS STATEMENT

Civil Society Platform on Oil and Gas Disagrees with President on Justification for ECG Privatisation

Accra-June 08, 2016 -The attention of the Civil Society Platform on Oil and Gas (CSPOG) has been drawn to President Mahama’s unyielding defence of his government’s decision to place the Electricity Company of Ghana (ECG) under a concession, in which defence the President was reported to have argued that “the move is necessary to make the company more efficient”.

The President is again, reported to have argued that the government has had to similarly deregulate the telecommunication sector, and the Post and Telecommunications corporation (P&T) years ago because it was not working; suggesting that, just like P&T was converted to Ghana Telecom, and later privatized to Vodafone “there will be long term benefits if the private sector is allowed to operate in key sectors of the economy.” The President further made the point that ECG is not working efficiently and that “it has to be fixed”.

The facts as the Civil Society Platform on Oil and Gas finds them do not support the President’s argument. There is clearly an inherent confusion in the comparison between liberalisation of an entire industry, with the privatisation of a state enterprise.

If what is being proposed for the electricity distribution sub-sector was liberalisation, in which case other players would be licensed to compete with ECG, then the Civil Society Platform on Oil and Gas will have no qualms in supporting such plans, as there is evidence to support the assumption that competition under proper regulation could result in efficiency and lower costs to consumers. But this is unfortunately not the case. Besides, the President seems to have conveniently overlooked the fact that, before Ghana Telecom was sold to Vodafone, we had tried Telenor of Norway, and Telecom Malaysia both of which failed.

Our checks have also revealed that Vodafone which the President gleefully cites as a success story is after all, not as successful as he would want us to believe. Ghana Telecom, now Vodafone, is in fact struggling to survive competition, and barely able to break even.

We want to emphasise that, the type of privatisation that hands over the management, and sometimes the assets of public companies to private entities often referred to as ‘strategic investors’, have NEVER EVER worked in this country. We can cite Ghana Airways under Speedwing Ltd. of U.K.; Aqua-Vitends Rand in the water sector, and several other divested state enterprises that have seen the transfer of ownership to foreign interests in the name of Private Sector Participation (PSP), and have failed.

We agree with the President when he suggests that we must fix ECG’s problems, but we find it a bit strange, that he attempts to equate “fixing the problem” with privatisation. Our understanding of “fixing the problem with ECG” is doing what Mr Kwame Awuah Darko has done with the Bulk Oil Storage and Transport (BOST) and what he is currently doing with the Tema Oil Refinery (TOR), but not the easy option of privatisation.

Obsession

It used to beat our imagination as to why successive governments have been obsessed with the type of PSP that involves foreign private sector entities, until the Hon. P.C. Appiah Ofori came out to reveal that money had changed hands in the Vodafone transaction, and that he was left out because he was absent from Parliament on the day the ‘booty’ was shared.

Indeed, Hon. P.C. Appiah Ofori’s revelation betrayed the greed and wanton deceit that drive this particular type of privatisation agenda.

Evidence of PSPs that have worked

The former MP’s disclosure put the obsession with this type of privatisation involving foreign private companies, into its proper perspective. Otherwise, if the government is genuinely in search of a model of privatisation that works for Ghana, it does not have to look very far.

At the time when government felt the need to introduce efficiency into the operations of GOIL, it offloaded majority of its stake in the company on the Ghana Stock Exchange. What that did for GOIL and Ghana for that matter, was that, it brought in new investment capital, improved corporate accountability, made the company more efficient, and brought vibrancy to Ghana’s stock market. Today, GOIL is a market leader.

Again, at a time when as a result of government’s interference in the affairs of Ghana Commercial Bank, the bank almost collapsed, a decision was taken by the then New Patriotic Party government to offload seventy percent of government’s stake in the bank to a strategic investor. It took a huge public campaign, led by the Integrated Social Development Centre (ISODEC) to persuade government to rather offload its stake on the Ghanaian stock exchange.

It is revealing to note here, that, Ghana Commercial Bank was able to raise more capital than it needed. Today the bank is the toast of Ghanaian banking entrepreneurship, poised to venture into the rest of Africa, and so has had to rebrand itself as GCB Bank.

We can again, cite the State Insurance Corporation (SIC) and several others that have been floated on the Ghanaian bourse and are doing very well. We can even cite the Bulk Oil Storage and Transport (BOST) and the Tema Oil Refinery (TOR), which did not have to undergo privatisation and yet are being turned around by a Ghanaian.

Having considered the facts, as we have come to know them, we do not think the decision to privatise ECG was well thought through. Indeed documents we have seen suggest that the whole agenda is being pushed by American interests. The unprecedented increases in electricity tariffs, which have been further compounded by the over thirty percent taxes imposed on consumers, are nothing but part of government’s commitment to the Americans to bring tariffs to attractive levels before handing over to the foreign investor.

Compatriots, we have shown examples of privatisations that have worked in this country, and we challenge President Mahama and his government to show us examples of their idolised model of privatisation that has ever been successful in the history of this country. We know they won’t find any, and so the justification to reconsider the path they are about to set ECG on.

(Dr Steve Manteaw)

Steering Committee Chairman

Source: citifmonline.com

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