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The Minister of Energy, Mr Boakye Agyarko, has reassured staff of the Electricity Company of Ghana (ECG) that their jobs have been secured for 20 years under the re-negotiated Ghana Power Compact Two arrangement.
Under the Compact Two, ECG is to be leased to a concessionaire to manage, operate and invest in it for a period of 20 years.
But it has been met with agitation by staff of the ECG for fear of being laid off.
The takeover has come about as a result of the Millennium Challenge Power Compact agreement programme, signed between the Government of Ghana and the Government of the United States (US).
Addressing a press conference in Accra on Wednesday to give answers to some concerns raised by the stakeholders, Mr Agyarko said all accrued benefits and entitlements would be transferred as well to the new company completely.
He explained that under the new arrangement, the new company did not have the right to alter those transferred benefits in any way.
Mr Agyarko said the new agreement had made provision for a severance package to be paid to workers who would voluntarily resign from the company.
“If you decide to leave ECG, then you will be paid the severance but you should not have the expectation or guarantee that the new company will take you on. You have made a decision to sever your relationship with the ECG and it should not put you in expectation that going forward you have a job with the new company. So it is open. All the ECG workers who want to leave and not join the new company are at liberty to do so and their severance so arranged, but it is not going to be a collective bargaining situation where all the 6,500 workers of ECG are paid a severance and then transferred to a new company,” he explained.
Mr Agyarko said staff of ECG were guaranteed of job security under the concession arrangement.
Throwing more light on the programme, he said the Compact Two sought to bring investment into the energy sector, specifically in distribution.
Mr Agyarko explained that Ghana stood a risk of losing US$469,300,000 under the Compact Two arrangement if it did not meet certain conditions in the agreement.
“We, therefore, had to make a decision as to whether the government wanted to lose the investment and raise the US$ 1.5 billion to invest in ECG to improve it or go by the Compact Two agreement to improve ECG and invest that money which can build 50 polyclinics into other social sectors that are not viable for the private sector,” he said.
Another issue the minister addressed was the restructuring of the Volta River Authority (VRA) to make it a holding company with subsidiaries.
Mr Agyarko explained that the re-structuring (approved by Cabinet) was in tandem with the recommendations of an original report issued in 1997 by the then defunct Ministry of Mines and Energy titled “ Power sector reforms.”
He said the implementation plan for the recommendations was to make VRA a holding company with subsidiaries to ensure efficiency and profitability.
“We have come to the point where the economics of combining hydro and thermal generation don’t augur well for VRA,” he said.
The report recommended making VRA a holding company to have subsidiaries with separate functions and balance sheets so there could be VRA Hydro, a fully owned Ghanaian subsidiary of the VRA holding.
Mr Agyarko said VRA was a world-class hydropower generator but that strength was not evident in its thermal power generation.
“What VRA had, therefore, been forced to do is to cross-subsidised by taking the profit of hydro to subsidise the losses of thermal. VRA needs about US$30 million every six weeks to buy crude to power its thermal assets. Looking through the balance sheets and its challenges, we decided to follow the 1997 recommendations,” he said.
He added that “we have another subsidiary holding the thermal assets and another service company that would in the interim hold all the main core business assets. That is the structure approved by Cabinet,” he said.
Mr Agyarko stated that government was a 100 percent shareholder of the VRA and, therefore, its decision to redeploy its assets to enhance profitability should not generate tensions.
“While the financial viability of VRA keeps going down, the VRA balance sheet is a sorry sight. It’s not the happy company it was when it was essentially a hydro company, so we need to take these hard decisions in order to restructure and save and restore it to make it a healthier company,” he said.
One thing on offer as part of restructuring is to incorporate solar in a big way in our power generation. Currently, Bui Dam is implementing or combining solar with hydro, and Mr Agyarko described it as the most effective way of combining renewable power generation.
He said a similar plan was in store for the Akosombo Dam.
On the International Tribunal for the Law of the Sea (ITLOS) ruling, Mr Boakye Agyarko said Ghana had gained 80 square kilometres of territorial space after a delimitation triggered by the ruling.
He said although the country made some marginal losses at certain points following the creation of the new border, they were insignificant and would not affect oil production.
Mr Agyarko explained that “at the first intersection of 29 nautical miles, Ghana loses marginally about 19 square kilometres of territorial space because the border is to the left of our claim.
“Between 29 and 196 nautical miles, Ghana makes a gain of 121 square kilometres because the new border is on the right of our original claim. In a nutshell, the net gain made by Ghana is about 80 square kilometres of additional territorial space,” Mr Agyarko said.
In September 2014, Ghana took Cote d’Ivoire to the special chamber of the ITLOS after negotiations with its West African neighbour over a maritime dispute concerning the West Cape Three Points broke down.
Mr Agyarko said “none of our oil fields in production have been affected by the ruling. All the oil fields we are working from are all squarely in the territorial space of Ghana, so there is no loss.”
He said that meant that Tullow Oil could now begin to add 13 more wells to improve its production, an estimated addition of 80,000 barrels per day.
He said “30,000 additional barrels of oil times 50 dollars is a lot of money that can keep the free senior high school (SHS), health insurance and the others going.”
Mr Agyarko added that more steps were being taken to secure Ghana’s territorial space and ensure that oil production continues unimpeded.
He was quick to add that “the good neighbourliness must continue,” he added.
Minister of Information
For his part, the Minister of Information, Mr Mustapha Abdul Hamid, who facilitated the press conference, said it was underpinned by the fact that he was receiving a number of calls from the media related to matters arising on the energy and petroleum sector.
“I thought it wise to arrange this meeting to help you hear from the authorities on the issue so that you could update the public appropriately,” he stated.
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