Private sector participation in energy distribution crucial under IMF programme

The involvement of the private sector in Ghana's energy distribution is crucial to the reforms detailed in the International Monetary Fund's (IMF) ongoing US$3 billion loan-support program.

This initiative, which aligns with the government's efforts to enhance energy efficiency and reduce debt, is described in the document that outlines the implementation of the country's three-year Extended Credit Facility (ECF).

In the past month, intermittent power outages have led to calls for the government to engage the private sector in addressing these issues, ensuring that Ghanaians receive reliable and affordable electricity.

The Ghana News Agency reviewed the proposal for the IMF loan-support program and discovered that the government intends to enter into a concession arrangement in the energy distribution sector.

While no specific timelines are provided, pages 15 and 67 of the program documents outline the government's intention to develop a strategy aimed at reducing distribution losses and enhancing revenue.

"The strategy will involve estimating the investment needed to upgrade equipment and systems, as well as finalizing the details of private sector involvement in the distribution sector," the program document states.

A recent similar effort was the agreement with Power Distribution Services (PDS), which was terminated in 2019 because PDS did not meet certain conditions.

As a result, the country forfeited approximately US$190 million in investment from the second tranche of the Millennium Challenge Corporation (MCC) power compact, which was intended for the long-term sustainability of energy infrastructure and financial recovery in the sector.

At that time, the government affirmed its commitment to private sector participation in the operations of the Electricity Company of Ghana (ECG), adhering to due process and integrity.

Ms. Alice Albright, Chief Executive Officer of MCC, stated on Thursday, May 9, 2024, that while they are willing to collaborate with Ghana again, there are no immediate plans to do so.

Nana Amoasi VII, Executive Director of the Institute for Energy Security (IES), has supported the idea of private sector involvement through a concession agreement in the energy distribution sector.

In a discussion with the Ghana News Agency, he noted that there has been no noticeable improvement in power generation since the onset of intermittent outages.

He emphasized that the situation could persist unless the government ensures a steady and sufficient supply of fuel to power plants, which necessitates private sector involvement.

"Such an approach can introduce expertise, investment, and the efficiency enhancements often required to tackle infrastructure challenges and elevate service delivery in the power sector," he remarked.

He also mentioned that the lessons learned from the PDS agreement mean that the government must ensure that "the concession agreement is meticulously crafted, transparent, and adheres to best practices to avoid the issues encountered with the previous deal."