Government remains committed in finding a suitable replacement of the Power Distribution Service (PDS) through private sector participation to boost the operations of the Electricity Company of Ghana (ECG).
On October 19, this year, government announced its decision to terminate the PDS concession after taking over from ECG following government’s detection of fundamental and material breaches of PDS’s obligations in the provision of payment securities for the transaction and related matters.
“Government is fully committed to private sector participation in ECG and is focused on moving forward with urgency to find a suitable replacement for the PDS arrangements” Mr Ken Ofori- Atta, the Finance Minister said this in his presentation of the national budget in Parliament on Wednesday.
The Finance Minister said there was the need to improve significantly the management of ECG, by bringing in world-class private sector expertise and attracting adequate private capital.
He said considering ECG’s current distribution systems losses of 24 per cent comprising 13 per cent commercial and 11 per cent technical losses, the government was motivated by the urgent need to reduce those losses and improve service quality through the effective deployment of modern technology and world-class technical expertise, with a view to creating a financially viable power distribution sector equipped to meet the current and future needs of Ghanaian households and businesses.
Mr Ofori-Atta said: “As we crystalise plans for the future of ECG, government is also enthused by the critical need to ensure the transfer of skills, with a view to building local capacity and introducing international best practices to enhance the operational, technical, commercial and financial wherewithal of our national electricity distribution utility.”
Against this backdrop, he said, government intends to initiate an accelerated tender process to select a new private partner for ECG in the coming months.
“It is indeed government’s intention to make relevant adjustments to ally viable power distribution sector that will sufficiently enhance the existing bid documents and tailor the process to optimise the selection from companies having a track record of managing and operating a comparable utility, so as to achieve a fair, transparent and expeditious closure of the transaction,” he added.
He said government could not overstate the importance of learning from past mistakes, if it was to make sound decisions going forward.
“However, we have no doubt that a well-executed partnership between ECG and the “right” technical and financial partners, will certainly improve our distribution capabilities and enhance end-user experiences.”
Mr Ofori –Atta said in that regard, heightened scrutiny would be brought to bear in the design and implementation of the financial and technical evaluation criteria to ensure that interested bidders did not only have credibility and extensive experience in operating and managing a comparable electricity utility, but also possessed the financial wherewithal to make the requisite investments in ECG to achieve significant reductions in technical and commercial losses, and drive operational efficiency to deliver sustained service reliability for the benefit of all Ghanaians.
Mr Ofori-Atta said while restoring private sector participation in the management, operation and financing of the required investments in ECG’s distribution assets, Government would make every effort to avoid the pitfalls that the PDS concession encountered and institute broad Ghanaian institutional participation, and democratise local equity participation, with an eventual listing on the Ghana Stock Exchange.
He said: “The decisions we take in respect of this transaction, will continue to affirm our time-honoured reputation as a business-friendly nation that respects the rule of law, and expects to remain an attractive destination for Foreign Direct Investment.”
Ghana remains committed to its relationship with the Millennium Challenge Corporation (MCC). Indeed, Government fully respects and is committed to the essential principles underlying the relationship between the MCC and the Government of Ghana, as well as the overall bilateral relationship between Ghana and the United States.”