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Business News of Wednesday, 24 May 2017

Source: thefinderonline.com

ECG deal set for September 2018


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ALL things being equal, by the end of 2018, the distribution business of the Electricity Company of Ghana (ECG) will be fully handed over to the successful concessionaire that will win the Private Sector Participation (PSP) bid.

Consequently, the financial closure of the PSP process is expected at the end of September 2018.

When the successful concessionaire is announced in September, it would have about three months to organise and commence full operations by end of 2018.

Six companies have been shortlisted under the concession for the PSP in the distribution business of ECG.

The companies are to bid for the ECG PSP concession and the successful concessionaire would be tasked to make investment designed to reduce technical, commercial and collection loses while improving service quality.

The six companies are: Tata Power Company Limited from India; Manila Electric Company from the Philippines; Ch Group Ghana with EDF and Veola Sa with Ghanaian address; Engie Services, SA from France, BXC Company Ghana Limited, registered and operating in Ghana; and Enel S. p. A. of Italy.

The deadline for Consortium Formation would be on September 22, 2017; deadline for submitting Comments is June 30; Final Request for Proposal (RFP) Release date is August 18, and the Proposal Submission deadline is Oct 20, 2017.

Speaking at the first Bidders conference in Accra yesterday, the Minister of Energy, Boakye Agyarko, said the successful concessionaire must appreciate the importance of turning around the fortunes of ECG.

He urged that the successful Concessionaire to be able to help the nation revitalise the power sector to enable industries become more productive and provide more jobs for Ghanaians.

Agyarko mentioned that those years of inadequate investment, inefficiencies within the utility, and a large stock of outstanding receivables, particularly in the distribution sector, have all conspired to make the organisations in the sector very weak.

He stated that there is no argument that the power sector remains central to the development, adding that an improved and efficiently managed power sector is key to unlocking the development and potential of Ghana.

As a nation, he noted that the Institute of Social, Statistical and Economical Research (ISSER), in its 2014 study, indicated that on the average, the country lost production worth about US$ 2.1 million per day during the power crisis.

For government, he lamented that what was even more critical was the resulting loss of jobs.

Agyarko reiterated that government is not privatizing the ECG and that government will still own the assets while it is being managed and operated by the Concessionaire.

“We are seeking the best qualified private sector partner, with the financial capacity and the right experience to partner ECG. We expect that the engagement will transfer capacity to ECG staff for sustainable management of the utility,” he stressed.

In his welcome address, the Chief Executive of Millennium Development Authority (MiDA), Ing. Owura K. Sarfo, said the ECG Financial and Operational Turnaround Project aims to strengthen the governance and management of ECG by bringing in a concessionaire to make investments designed to reduce technical, commercial and collection losses and improve service quality.

He explained that is it MiDA’s expectation that bids would be received by October 2017 and a concession agreement signed with the selected Concessionaire by March 2018.

That way, he said, the ECG-PSP transaction can reach financial close by early September 2018 so the concessionaire can commence in earnest the management of, operation and investments in ECG by October 2018.

Professor Yaa Ntiamoa-Baidu, Board Chair of MiDA, expressed happiness that progress was being made with regard to the selection of a private sector partner for ECG.

“We encourage our bidders to take advantage of the opportunity provided by this conference to ask the relevant questions and gather the information you need to take the required actions in relation to the bidding process and to prepare your proposals,” Prof Ntiamoa-Baidu said.

Government, in 2014, signed the Ghana Power Compact with the Millennium Challenge Corporation (MCC) an independent USA government foreign aid agency which provides the country a grant of US$498.2 million to improve the performance of Ghana’s power sector to unlock the country’s economic potential, create jobs and reduce poverty.

The major project under the Compact is the ECG Financial and Operational Turnaround Project that is designed to transform ECG into an efficient and financially strong institution through private sector participation. About US$351 million of the MCC grant was being invested in ECG.

The 6 shortlisted companies:

Bxc Company Ghana Ltd/ Xiaocheng Technology Stock Company Limited

BXC Ghana Limited (BXC), a company registered in the Republic of Ghana is a subsidiary of Xiaocheng Electronic Technology Stock Co. Ltd which is in the business of manufacturing and deploying highly efficient prepayment metering systems and management of power supply across the world.

BXC was established in 2010 in Ghana with a group of Chinese investors who have trained and used Ghanaians to implement major projects in Ghana.

In September, 2011; BXC and the ECG signed an agreement for ten years where BXC shall engage in System Loss Reduction in the Teshie and Bortianor areas; the commercial aim of which was to share proportional losses recovered by the project while technically improving the infrastructure and deploying more modern systems of power distribution management.

Aiming to reduce the losses, BXC cooperated with ECG quite well. Currently, the outcome of the project is been very good, However, both of BXC and ECG agree that there are challenges, which demands greater BXC and ECG coordination in order to minimize the losses and maximize the proceeds.

Manila Electric Company

Manila Electric Company is the largest electric distribution company in the Philippines covering 36 cities and 75 municipalities, including Metro Manila.

It has been in service for 113 years now and serves almost 5.8 million customers.

The company’s has Market capitalisation of $7.7 billion as at year-end 2015.

ENGIE Energie Services S.A.

ENGIE Energie Services S.A. designs and operates energy services for businesses and local authorities, as well as public and private clients.

It provides services related to climate control, refrigeration and fire protection, industrial maintenance, electrical installations and integrated systems, urban heating and cooling networks, public transportation and communication systems, and energy.

It specialises in facilities management solutions; and installation diagnostics, multi-fluid and multi-site analyses, forward-planning implementation, energy and technical services management, energy performance contracts, smart management of technical installations, energy mix optimization integrating local, renewable energy sources, user monitoring systems, and information systems.

ENGIE Energie Services S.A was formerly known as GDF Suez Energie Services SA and changed its name to ENGIE Energie Services S.A.

The company was incorporated in 1991 and is based in Puteaux, France. ENGIE Energie Services S.A. operates as a subsidiary of ENGIE SA.

Enel S.P.A

Enel is Italy’s largest power company, and Europe’s second listed utility by installed capacity.

It is an integrated player which produces, distributes and sells electricity and gas.

Further to the acquisition of the Spanish utility Endesa, Enel has now a presence in over 30 countries with nearly 89GW of net installed capacity and serves nearly 61 million customers.

Listed on the Milan stock exchange since 1999, Enel has the largest number of shareholders of any Italian company, at some 1.1 million retail and institutional investors in 2015.

Enel is also the second-largest Italian operator in the natural gas market, with approximately 2.6 million customers and a 10% market share in terms of volume.

Tata Power Company Limited

Tata Power had its inception in 1915, establishing India's first large hydro-electric project in Khopoli, Maharashtra and driven by its late founder, Shri Jamshetji N. Tata's pioneering vision.

Tata Power is India’s largest integrated power company with a growing international presence.

The Company together with its subsidiaries and jointly controlled entities has an installed gross generation capacity of 9432 MW and a presence in all the segments of the power sector.

Fuel Security and Logistics, Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading.

It has successful public-private partnerships in Generation, Transmission and Distribution in India namely “Tata Power Delhi Distribution Limited" with Delhi Vidyut Board for distribution in North Delhi, 'Powerlinks Transmission Ltd.' with Power Grid Corporation of India Ltd. for evacuation of Power from Tala hydro plant in Bhutan to Delhi and 'Maithon Power Ltd.' with Damodar Valley Corporation for a 1050 MW Mega Power Project at Jharkhand.

Tata Power is serving more than 2.6 million distribution consumers in India and has developed the country’s first 4000 MW Ultra Mega Power Project at Mundra (Gujarat) based on super-critical technology.

It is also one of the largest renewable energy players in India with a clean energy portfolio of 1749 MW.

Its international presence includes strategic investments in Indonesia through a 30% stake in the leading coal company PT Kaltim Prima Coal (KPC), 26% stake in mines at PT Baramulti Suksessarana Tbk ("BSSR"); in Singapore through Trust Energy Resources to securitize coal supply and the shipping of coal for its thermal power generation operations; in South Africa through a joint venture called ‘Cennergi’ to develop projects in sub-Sahara Africa; in Zambia through 50:50 joint venture with ZESCO for 120 MW Hydro which has become operational in 2016; in Georgia through AGL which is a joint venture with Clean Energy, Norway & IFC for development of 185 MW hydro project which is scheduled to be commissioned in 2016; in Australia through investments in enhanced geothermal and clean coal technologies and in Bhutan through a hydro project in partnership with The Royal Government of Bhutan.

With its track record of technology leadership, project execution excellence, world class safety processes, customer care and driving green initiatives, Tata Power is poised for a multi-fold growth and committed to 'lighting up lives' for generations to come”.

CH Group/ EDF SA/LMI Holdings/Veolia SA

The above four companies have also formed a consortium.

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