The Power Distribution Services Ghana Limited (PDS) has announced plans to invest over US$580 million in Ghana’s power sector within the next five years after receiving the Assets and Operations of the Electricity Company of Ghana (ECG), on Wednesday.
For the next 20 years, beginning March 1, 2019, PDS Ghana Limited would be the electricity service provider in all of ECG’s operational areas in the Southern Distribution Zone of Ghana – the Greater Accra, Eastern, Volta, Central and the Western regions.
ECG’s assets would be leased to the PDS Ghana Limited, the Concessionaire, while the ECG would become an Asset Holding Company, and after the end of the Concession, all assets would be transferred back to it.
The Millennium Challenge Corporation (MCC) would also be investing US$537 million into the power sector to improve electricity reliability, access, affordability and efficiency under the Ghana Power Compact II.
PDS is expected to strengthen the governance, management and operations of the ECG and improve the delivery of power to end users as well as support the country’s socio-economic growth and alleviate poverty.
The ECG Private Sector Participation (PSP) Activity is one of the key project activities that constitute the ECG Financial and Operational Turnaround (EFOT) Project, under the 498.2 million-dollar Ghana Power Compact programme.
At an official ceremony to transfer the Assets and Operations, in Accra, Dr Ofosu Ahenkorah, the Executive Secretary of the Energy Commission, symbolically presented Distribution and Sales Licences to the PDS Ghana Limited.
The Management of the ECG also received Power Brokerage and Export Licences to supply bulk power to PDS and Meralco Consortium, and to also sell electricity to neighbouring West African countries.
The two licences would enable the PDS and Meralco Consortium to operate the wires of the ECG and supply power from bulk supply points to homes and electricity consumers as well as collect bills from power consumers.
The Power Distribution and Sales Licences are valid for 20 years but after five years of operation, other corporate entities would be licensed to engage in sale of power in the country.
On August 5, 2014, Ghana signed a five-year Power Compact with the Millennium Challenge Corporation (MCC), a United States of America Government Agency.
Under the Agreement, Ghana would utilise a 498.2 million-dollar grant, provided by the MCC, to undertake reforms and infrastructural projects aimed at addressing the inefficiencies in the power sector and meet the increasing demand of power by industries and domestic users.
Key stakeholders including the Energy Commission, ECG, Public Utilities Regulatory Commission, and other state actors collaborated to design the ECG PSP Transaction, culminating in the birth of the PDS Ghana Limited as the acceptable private sector participation provider.
The Millennium Development Authority (MiDA) was tasked to select a competent and viable company to take-over the ECG.
On April 10, 2018, MiDA selected Meralco Consortium from Philippines as the winner of the ECG PSP out of six bidders after a competitive bidding process to partner PDS Ghana Limited.
PDS Ghana Limited comprise AEnergia SA, an Angolan company, and three Ghanaian firms – TG Energy Solutions Ghana Limited, Santa Power Limited and GTS Power limited, which have 51 per cent shareholding, while Meralco Consortium owned 49 per cent.
Mr Yaw Osafo-Maafo, the Senior Minister, said electricity was an economic and political tool that signified civilization, especially in rural communities.
“We cannot talk about an economy without reliable power and Ghana has gone through some difficulties when it comes to power distribution, therefore, the second Compact Agreement covering this sector was very pleasing to me personally in tackling a programme that is extremely important to the country,” he said.
He expressed confidence that the ECG take-over would bring the needed transformation, enhance power distribution and eliminate the technical and commercial losses hovering around 25 per cent.
It would also boost the government’s agriculture modernisation towards moving “Ghana Beyond Aid”.
The Senior Minister acknowledged the financial support the Millennium Challenge Corporation had offered to the Government, which amounted to 1.1 billion dollars, comprising the First and Second Power Compacts.