$565m US cash doled to private coy

The Chairman of the Public Accounts Committee of Parliament, Kwaku Agyemang-Manu, has questioned the rationale behind the government’s decision to resource a private company to improve the energy situation of the country with grants secured from the Millennium Challenge Corporation (MCC).

According to the Dormaa West legislator, it does not make economic sense to use grants secured from a development partner to resource a private company to execute a business plan, which proceeds would be shared between the two entities.

“Mr. Speaker, to the best of my knowledge, and to the best of the knowledge of any good economist in this country, you know that the second compact of the MCC is a grant to Ghana by the United States of America. How could you put MCC money with a private sector generate power? Are we going to on lend grant to the private company? Are we going to partner a private company with our grant?” he quizzed.

Mr. Agyemang-Manu made this startling revelation when contributing to the 2015 Budget statement on the floor of the House yesterday.

The Finance Minister, Seth Terkper, on November 19, 2014, moved the motion for the adoption of the 2015 Financial and Economic Policy Statement of the Government of Ghana.

Ghana and the Millennium Challenge Corporation have signed the MCA Ghana Compact Two, worth US$565 million, which is geared towards increasing private sector investment in power generation, after the successful completion of the US$547 million project, which was used to prop the agricultural sector.

One of the critical areas being targeted for reforms in the energy sector, according to the Vice President of the Millennium Challenge Corporation for Africa, Jonathan Bloom, in his recent interview with Joy FM, is the gas processing sector.

Another area central to the heart of the MCC is reform in the Electricity Company of Ghana (ECG), where the American government is looking at private investors building generation.

But, prior to the disbursement of the US$565 millennium grant, which is scheduled to begin in January 2015, there are reports that the government has engaged some private firms to ensure improvement in the country’s power sector, as spelt out in the agreement with the MCC, using part of the grant from the American Ggovernment. This arrangement, according to the Chairman of the Public Accounts Committee, was not in the best interests of the country.

According to him, any private investor wanting to invest in a particular sector must have some seed money to inject into the business, and not rely on the government to resource it before taking off.