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13.10.2015 Business & Finance

Ghanaian Businesses Must Take Advantage - Mida Boss

13.10.2015 LISTEN
By Adnan Adams

Chief Executive officer of the Millennium Development Authority Ing. Owura Sarfo has challenged Ghanaian businesses to take up a concessionaire role at the Electricity Company of Ghana as part of the power sector improvement programme.

He also urged interested local companies to partner with international companies to bid and invest in Ghana’s energy sector.

“We would urge all interested parties, particularly, Ghanaian indigenous companies, to take up the challenge and quickly submit their letters to express their interest in this venture,” he said.

The programme is under phase two of the Millennium Development Compact agreement between the government of Ghana and the US government.

Ing. Owura Sarfo stressed that, if the Ghanaian businesses do not have the muscle they can team up to form a consortium to manage ECG under the concessionaire programme.

Explaining the details of the concessionaire role, Ing Sarfo said, it is a third party right to manage Ghana's biggest power distributers.

It is just like a land owner who gives right to a farmer to come work on the farm after which the land owner takes two-third of farm produce, he explained further.

There are concerns the concessionaire arrangement is part of a grand scheme to privatize ECG especially, to foreign investors but the MiDA CEO said the arrangement is "open to everybody including Ghanaians."

He pointed out that the concessionaire arrangement will not go without local participation, adding even if a foreign investor wins the bid to take up that role it must have a local component involved.

Even though concessionaires are given between a 20 to 30 year period within which to recoup their investment, Ing Sarfo said they are yet to agree on the time frame for the would be concessionaire under the ECG arrangement.

The arrangement is expected to begin in 2017.

MiDA is meanwhile dealing with some conditions precedent before the phase two of the Millennium Development Compact will come into force.

Some of these conditions include a launch of tender documents of ECG, and how to deal with government debt owed ECG.

The CEO of MiDA said any company or partner, which would finally win the concession bid under a private sector participation in ECG, would have to satisfy various conditions such as, being sensitive to local customs and conditions, and ensuring the equitable treatment of ECG staff, who were just about 6,000.

Other conditions would are leveraging private capital to address operational and commercial competencies necessary for specific challenges of ECG’s operation and applying corporate-wide approaches with respect to operation, management and governance of ECG.

Ing Sarfo said under the whole Compact, six projects that had been identified were ECG’s financial and operational turnaround project; regulatory and operational turnaround project; access project; power generation sector improvement project; and energy efficiency and demand side management project.

He gave the assurance that much progress had been made since the compact was signed on August 2014, saying, tremendous efforts had been made to fulfil the conditions that needed to be satisfied before the Programme Funds could be released, which was called the Conditions Precedent.

He announced that by the end of the year, the tender document would be launched whilst in May to June 2016, offers would be accepted from interested companies and the concession would be given out around May 2017.

“Under the Concession, Ghana would still own the assets of ECG and set the rules for the concession deal,” he explained.” The concession is expected to last between 20 and 30 years but we are still to agree on the specific period,” Ing Sarfo explained.

Dr Kofi Asamoa Baah, a Technical Advisor at the Ministry of Finance, said Ghana really needed such private partnership deal to address her energy crisis as government could not address the dumsor through the national budget allocation, which left ECG with only seven per cent for investment.

The Millennium Challenge Corporation would invest up to $498.2 million to support the transformation of Ghana’s power sector and stimulate private investment.

The five-year Ghana Power Compact seeks to create a financially viable power sector that would meet the current and future needs of households and businesses and ultimately help fight poverty across the country.

The compact would play a critical role in Power Africa, the U.S. Government’s initiative to double access to power on the African continent.

The government is expected to invest at least $ 37.4 million of its own money, and the Compact is expected to catalyze at least $ 4.6 billion in private energy investment and activity from American firms in the coming years.

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