Parliament yesterday approved the concessionary agreement that will allow private sector participation in the operations of the Electricity Company of Ghana (ECG).
The private participation would begin on August 2, 2018.
The agreement was laid in Parliament by the Minister of Energy, Boakye Agyarko, on Tuesday, July 10.
He said the private partners are expected to invest a minimum of $580 million to deal with the huge operational losses of the company.
Private partners, led by Manila Electric Company (Meralco), have been selected for the private sector participation in ECG in line with the terms of the Second Millennium Challenge Compact agreed upon by the previous National Democratic Congress (NDC)-led Mahama administration in August, 2014.
The Minister said that the management of the ECG in 2017 posted a loss of over GH¢767 million before tax while its liabilities stood at GH¢7.6 billion with current assets standing at GH¢5 billion, meaning a net loss of over GH¢ 2 billion.
But approving the agreement in Parliament yesterday, the National Democratic Congress (NDC) Member of Parliament for Yapei/Kusawgu, John Abdulai Jinapor, contested the figure given to Parliament as the total value of assets of ECG.
According to the MP for Yapei/Kusawgu, GH¢5 billion given as the total cost of assets of ECG could not be right because in 2014 the total assets of ECG were estimated at GH¢9.4 billion.
Mr Jinapor said some of the private partners selected by the government do not have any track-record in the energy sector and that their participation could be risky for the country.
“I don’t think the bidding and selection were competitive enough,” he said, adding that one of the local partners by name TG Energy Solutions was a second tier company which did not have any physical address but was selected.
The legislator said the partners could ask Ghanaians to pay more for electricity.
The MP for New Juaben South, Dr Mark Assibey-Yeboah, said that the agreement was the best deal initiated by the NPP government which would benefit Ghanaians.
He said per the agreement no employee of ECG would lose his or her job.
After laying the agreement in Parliament, the Minister told journalists that the previous NDC administration agreed to privatise the ECG to deal with the continuous losses and inject private capital into the operations of the company to improve the quality of service, efficiency and finances to minimize financial burden on government.
Mr Agyarko said the NPP, after taking over power in January and inheriting the Second Millennium Challenge Compact from the NDC, critically examined the available options of a lease, management contract, partial or full privatization and concession for the privatisation.
He said the NPP opted for the concession and proposed better terms that would inure to the benefit of Ghanaians and the nation at large.
The Energy Minister said under the new deal Ghanaians would have 51% shares in the company as against 20% agreed upon by the previous NDC administration while the concession would last for 20 years instead of the 25 years previously agreed upon.
He mentioned the Ghanaian shareholders as TG Energy Solutions, which owes 560,000 shares of the company’s two million shares, representing 28%, Santa Baron Ventures, which owes 260,000 shares, representing 13% and GTS Engineering Ltd owing 200,000 shares, representing 10%, totaling 51%.
He also cited the foreign shareholders as Manila Electric Philippino owing 600,000 (30%) and Anergia SA Angola owing 380,000, which represents 19%.
The Minister said the private partners would help invest in the distribution of power and improve the financial and operational turnover of the company.
He said they had agreed to use the name Power Distribution Services (Ghana) Limited for their operations.
Mr Boakye Agyarko said despite the private participation, ECG remains the property of the state and that the government would continue to appoint the managing director of the company.
He assured Ghanaians that the private participation would not affect pricing of electricity which would still be done by the Public Utilities Regulatory Commission (PURC) under its pricing system.
He said electricity supply would be improved and pricing also made very competitive and affordable.
The Minister also assured that workers of ECG that they would not be affected by the new agreement.
By Thomas Fosu Jnr