The Millennium Challenge Corporation (MCC) has deferred to December the release of the first tranche of the Ghana Power Compact grant due to delays on the part of government in meeting the terms of agreement.
The Ghana Power Compact between the MCC and the Government of Ghana (GoG) was signed in August 2014, and disbursement expected to begin in the middle of this year.
Mr Kamran M. Khan, the Vice President of the Department of Compact Operations at the MCC, who disclosed this on Thursday in Accra during a press forum, said the fund would be released over a five year period beginning from the day of disbursement of the first tranche.
He said the Compact grant would be released in trenches on a timely basis for the benefit of the people of Ghana once the necessary conditions were in place.
Mr Khan said the five year, $498.2 million Ghana Power Compact seeks to reduce poverty and open the Ghanaian energy market to private investment by supporting the transformation of Ghana?s power sector.
The grant also seeks to create a financially viable power sector that will meet the current and future needs of households and businesses, as well as create credible off-takers for fuel supply and generated electricity.
He said under the agreement, the GoG was not to privatize the Electricity Company of Ghana (ECG) but to place it under concession.
A concession agreement is a negotiated contract between a company and a government that gives the company the right to operate a specific business within the government’s jurisdiction, subject to certain conditions.
He said the agreement would improve the governance and management of ECG by bringing a private sector operator and building infrastructure and foundational investments designed to reduce losses and improve service quality.
Mr Khan said the Government of Ghana would need an international adviser to help in the negotiations, which the MCC would finance from its grants.
He said when the period of the concession comes to an end; the GoG would take over the ECG or renew the contract with the concessionaire.
The Vice President said his visit to the country afforded him the opportunity to meet President John Dramani Mahama and other key players in the power sector.
Mr Khan said the Government of Ghana was committed to increasing its power generation capacity through the development of independent power producers.
He expressed satisfaction over the level of leadership put in place to manage the Millennium Development Authority (MEDA) in the country; which was a major requirement of phase two of the MCC.
Mr Khan said the compact would provide essential technical assistance to establish a sustainable, market-oriented gas sector in Ghana so that gas could serve as the principal fuel source to meet the growing demand for electricity at a lower cost.
He said there was an opportunity for Ghana?s power sector to be transformed into a sub-regional hub for electricity.