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Business News of Thursday, 26 July 2018

Source: citinewsroom.com

Cost of power could go up after ECG concession – John Jinapor

Former Deputy Power Minister, John Jinapor has expressed fears that consumers may have to pay more for electricity if the Electricity Company of Ghana (ECG) debt levels remain the same after the concession agreement.

On Monday, Parliament approved the agreement between ECG and the Philipino company, Meralco consortium.

The agreement would see the company under the management of the concessionaire for 20 years.

Contributing to the debate on the motion, the Yapei-Kusawgu MP said there are challenges with the agreement which must be corrected to ensure that the cost of electricity does not rise with the operationalization of the concession agreement.

According to him, “[for] the outstanding bills of ECG; the understanding is that the outstanding debts or liabilities of ECG will be a reference and that ECG will have to deal with that.”

“If we continue this way and we do not look at some of these critical concerns I am raising, my fear is that at the end of this concession, the end user or consumer will be called upon to pay higher than they are currently paying,” Mr. Jinapor warned.

The agreement between Meralco Consortium and the government of Ghana was laid before Parliament earlier this year by the Energy Minister, Boakye Agyarko.

As part of the agreement, the concessionaire will invest over US$ 580 million over a 5-year period into the ECG to improve on the performance of the company.

The announcement followed the disqualification of some investors who expressed interest, including BXC Consortium.

Per the compact, the Millennium Challenge Corporation is expected to inject about $418 million into ECG, while Meralco will invest about $580 million.

Details of Compact II

Under the Power Compact, six projects will be implemented to address the causes of the unavailability and unreliability of power in Ghana.

The plan includes the ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.

The rest are Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.

The Government of Ghana signed the Ghana Power Compact with the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington on August 5, 2014.

Call for probe

The African Centre for Energy Policy (ACEP) is contending that Meralco Consortium, which was selected by the Millennium Development Authority (MiDA) to manage the ECG did not fulfill the 51 percent local content requirement before its approval.

The government introduced a new policy which required any company that wins the bid to have a 51 percent Ghanaian ownership in the structure of the concession.

According to the Executive Director of ACEP, Benjamin Boakye, though Meralco later presented a group of Ghanaian companies as its partners the revelation that it did not fulfill the requirement raises serious questions about the selection process.