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Business News of Tuesday, 15 November 2016

Source: citifmonline.com

Court to rule on ECG interlocutory injunction case

An Accra High Court is expected to today rule on an interlocutory injunction case file against the government on its plans to cede part of the operations of Electricity Company of Ghana (ECG) to a private entity.

A group known as the Coalition Against the Concession of ECG contends that the proposed plan by government is not in the best interest of the nation and must not be allowed to go through.

The planned privatization which forms part of the conditions under which Ghana is accessing the Millennium Challenge Compact II has been met with stiff opposition from several quarters, including workers of ECG but government has insisted the move is in the best interest of ECG.

President John Mahama has stressed that private sector participation in Ghana’s power sector is inevitable if the sector is to perform satisfactorily. According to him, the long term benefits over reduced losses outweigh the immediate concerns militating against such move.

The decision to allow the Millennium Challenge Corporation (MCC) to take part in the management of Ghana’s power sector has been met with stiff opposition from workers as well as labour unions. Despite assurances of no job losses, the utility sector workers are defiant with their resistance.

But the President is optimistic a private management will promote efficiency. “That’s the way we are looking forward to; to improve efficiency in the distribution so that we are able to pay off those who are generating power.

In an era where we have the Independent Power Producers (IPP), they cannot be treated like the VRA which is a state owned enterprise and therefore borrows to sustain its operations bearing in mind that the state will intervene in settling such debts like we have done recently,” he stated.

The inability of the power distributor (ECG) to retrieve revenue from some consumers due to illegal connections have also led to revenue losses of up to about 25 percent. President Mahama believes the figure will reduce significantly with the coming on board of the Millennium Development Authority (MiDA).

Meanwhile, Ghana is considering selling off power to neighboring countries as the country’s production level nears over-generation. By this, the generation is likely to exceed demand.

This comes despite Ghana’s 2000 megawatts consumption figure, the second highest in West Africa after Nigeria. According to President Mahama, the cost of meeting capacity charges in the event of over-generation will make it economically prudent to consider exporting the excess power.