Government must reject the attempt by IPPs to manage ECG

The Government of Ghana must vehemently reject the proposal submitted by some interested Independent Power Producers (IPPs) with their intention to form a consortium to manage the Southern Power Distribution Network of electricity (ECG) so as to prevent a monopoly in the power sector.

A report sighted on Ghanaweb indicates that a 12-member group of IPPs, led by Togbe Afede’s Sunon-Asogli Power Ghana Ltd, have formally approached the Ministry of Energy with a letter, expressing an interest in taking over ECG as a new concessionaire.

In my humble opinion, granting this proposed idea of the IPPs to venture into the management of public-facing end-user of electricity as well will lead to excessive control of the commodity. This will also give them undue privilege and ability to influence the pricing of electricity tariff at the same time as they sell power to the state.

These Independent power producers, by virtue of their status and definition are not public/state own entities. They’re privately own entities in the business of power production and selling same to the off-takers – thus, the State & Central utilities (VRA) under long term Power Purchase Agreements (PPA).

As per the current situation, the power generation companies, which includes the IPPs, generate the electric power in Ghana and sell it to VRA which is the state owned parent power generation company based on their PPA.

Then the Ghana Grid Company (GRIDCo) which is also a state owned company, established with exclusive responsibility of operating the power transmission network systems, takes care of the economic dispatch and transmission of the electricity from the wholesale suppliers (Power generation companies) and distribute in bulk to all the High Voltage and Medium Voltage substations, to be received at the end by the Electricity Company of Ghana (ECG), Northern Electricity Department (NED) and Mining sector.

Now, this is where the proposed consortium of the IPPs is seeking to come in again, on the section of ECG, to get another contract from the state which would grant them the permission to manage the distribution and selling of the power to Ghanaians who are the final end-users.

As an expert in the field of electrical power generation, transmission and distribution, I see this proposal as problematic with the potential to cause chaos, and if allowed will lead to cartel and unethical monopoly of the system which will not encourage the needed diversity and effective competition in the management of power supply in Ghana. This could also be tantamount to engaging in unintelligent conflict of interest on the part of the IPPs.

I would like to emphasise that, I am hundred percent for diversification of the ECG, to bring in qualified conscientious technical and commercial management entity to inject profit-minded zealousness into the company to mitigate its technical lapses and financial challenges so as to increase its profit margins and reduce losses.

We can appreciate that these IPPs are stakeholders in the electricity value chain with verifiable experience in the generation space in Ghana, however, this should not necessarily suggest that they have the requisite expertise and experience to produce the expected results with the ECG within such daunting end-user customer-facing business environment.

We can explore for a better independent technical entity to improve diversity and promote competition in the sector.

In the search for a qualified partner to commit both financial and technical inputs to turnaround the ECG’s operations, the authorities must be very diligent so as not to entrust such an important assignment to a company that will use the opportunity as a platform to experiment for experience in the retail power management.