.... Japanese Power Companies

By Kofi Thompson

If Ghanaians want to have a 21st century power industry, which provides reliable round-the-clock electricity, then there is a need for the country's ruling elites to take a radical approach to reforming the national economy's power-sector.

With the mounting challenges facing the power sector's state-owned entities, the question is: has the time not come for the enterprise Ghana to leave the provision of electricity to the private sector?

It is obvious that the state-owned entities in Ghana's power sector need massive amounts of investment funds to modernise their plant and equipment.

Clearly, that cannot come from a cash-strapped government. Yet, modernise our power sector we must, if our nation is to grow and prosper.

Why do we therefore not marry our need for investment funds to modernise the state-owned entities in the power sector (which the government cannot provide), to the need for new markets by Japanese companies to enable them expand and prosper in the long-term?

My humble suggestion, is that the President invites the leaders of Japan's power industry to Ghana, to see for themselves first hand, the lucrative potential market awaiting them in West Africa: exporting electricity from a solid Ghanaian base.

Between them, a consortium of Japanese power companies and the country's mutual-fund industry, could easily buy the Electricity Company of Ghana (ECG); Ghana Grid Company (GRIDCO); the Volta River Authority (VRA); and the Bui Power Authority (BPA) in one mega-deal worth a few billions, informed by a long-term perspective.

Modernising those newly-acquired Ghanaian power companies quickly, will be in their interest - to put them on a profitable path, which will enable the Japanese consortium to start recouping its investment.

Perhaps a separate deal with the Ghana National Gas Company (GNGC), could empower the Japanese to develop their own pipelines and infrastructure, for the supply of natural gas directly from offshore Ghanaian oilfields, so that they can always have an assured supply of natural gas for their Ghanaian thermal power plants.

And if those negotiating on Ghana's behalf take a leaf from Mr. Martin Amidu's book, and think of our nation's interest - as opposed to seeing it as an opportunity to receive secret kickbacks - they could persuade the Japanese consortium to pay a premium price for those state-owned utility companies, and assume all their debt too.

That will make the government's exit from the power industry a profitable one. It will also set a precedent for future privatisations of state-owned enterprises - in which maximum value is derived from government's exit from a particular industry or state-owned enterprise: rather than Ghana ending up receiving peanuts for deliberately undervalued assets, and being saddled with mountains of debt on top of fire-sale tragedies.

The opportunity to best its ache-rival China, in a win-win model-deal in an emerging market in fast-growing Africa, which can be contrasted sharply with the bitterness evoked by China's hard-as-nails Shylock-type loans being extended to nations across the continent (such as the controversial US$3 billion loan to Ghana), will be hard to resist for Japan.

Japan, unfortunately, has seen its past generosity to Africa put in the shade, by China's aggressive grab for natural resources in Africa - made palatable by the provision of funding for infrastructure projects throughout the continent.

With matured home markets, and an economy in which growth is less than snail-pace, Japanese industry is desperate for new markets overseas, to provide it with growth.

That is why this is the perfect time - especially with a President in power today, who has a lot of goodwill amongst Japan's ruling elites, because of his past association with Japan's diplomatic mission here - to sell ECG, GRIDCO, the VRA and BPA to Japanese power companies.

Tel: 027 745 3109.

Email: peakofi.thompson@gmail.com.