Press Statement By “Save ECG Now” On The Sale/Privatization/Concession Of Both The Electricity Company Of Ghana (Ecg) And The Northern Electricity Distribution Company (Nedco).

Fellow Ghanaians, Ladies and gentlemen of the Press, we would like to begin by expressing our most profound appreciation to all the people gathered here, especially members of the media for their continuous coverage of our position and for honouring our invitation to cover today’s event. Let us introduce our group once again.

SAVE ECG NOW is a group of concerned Ghanaians who have collectively vowed to do all that is within their power and within the confines of the law to prevent the Government from their intended sale of our two eminent national assets, which are the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo), to private investors.

Our inspiration for this resistance stems from lessons drawn from countries such as Brazil, South Korea, Indonesia, Argentina, Thailand, India, Iran and Mexico where the privatization of their national electricity companies did not only fail but further worsened the problems the sale was intended to address.

We do not think Ghana must reinvent the wheel by going through the same process when the results would inevitably be failure, the loss of revenue and two vital national assets, and further hardship on electricity consumers in Ghana.

THE GOG, MCC AND MIDA.
Ladies and Gentlemen of the Press, the decision to privatize these two Companies arose out of the results of a dark alliance between the GoG, the MCC and MIDA. We shall like to remind everyone here gather briefly on this alliance.

The Government of Ghana (GoG) as condition precedent for accessing a grant under the Millennium Challenge Corporation (MCC) Compact II undertook sometime back to privatize both the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO).

As part of the arrangements, MiDA sole-sourced the IFC of the World Bank to act as Transactional Advisors mandated to assist the Government make a decision on the nature and form of the proposed privatization of these companies.

IFC recommended two options for the Government’s perusal; partial privatization or concession. The IFC further recommended the period of concession to range between 20 – 30 years with emphasis on 25 yrs.

GoG decided to opt for a single concession for a period of 25 years, agreeing further that the concessionaire will operate, maintain and invest in the distribution assets of ECG and NEDCo, under a Lease and Assignment Agreement (LAA).

Ladies and Gentlemen, this is where it gets interesting. Our investigations reveal that the so called private investor when given the concession would not invest any external funds/money into the activities of both ECG and NEDCo but would rather use funds obtained from the revenue of the companies.

Ladies and Gentlemen, this settles the argument on the viability or otherwise of the ECG and NEDCO and begs the question of why the Government is bent on selling a company which isn’t bankrupt or running bankrupt for chickenfeed.

SOME ANALYSIS OF ECG REVENUES.
Let us at this point, Ladies and Gentlemen of the media, reveal some findings in respect of ECG’s Revenues in some parts of the country to justify why we call the price being paid for the concession as chickenfeed.

Our findings revealed that, when it comes to revenue mobilization, Tema Region alone makes revenue of GHC 16 Million a week. This is multiplied by 4 weeks comes to revenue of GHC 64 Million for a month. Costed to a year, Tema Region alone makes GHC 768M. If you multiply this GHC 768 Million for 25yrs you will get GHC 19.2 Billion. The revenue from Tema Region alone is tenfold more than how much the Government is selling out the entire ECG and NEDCo for.

The Accra East and West Regions put together makes two times the revenues that is mobilized by Tema Region. ECG and NEDCo are profitable state institutions. If the government does not have money to pay up its debt then it should look at other ways of resourcing the ECG and NEDCo and not necessarily a Private Sector Participation (PSP) for 25 years.

Again, based on these facts, we are left wondering why the Government is bent on selling ECG AND NEDCO. And we have some answers.

For some time now we have been reasonably suspicious of the Government's intention knowing their penchant and history of running down State Institutions and selling it off to cronies under sweetheart deals among others.

A closer examination of the current deal by us reveal a state of affairs which is potentially criminal and absolutely unforgivable and which must be dealt with in accordance with the laws of Ghana forthwith.

We found as a fact that the Government intends to privatize the ECG and NEDCO for a period of 25 years at a ridiculous price of $469.3 Million.

We further found as a fact that the Government owes ECG a crippling sum, in the region, of US$ 500 Million even though the Finance Minister informed us of a debt of GHC 728 Million which has severely hampered the operations of the companies. Curiously, we found that the Government intends to pay this amount after the concession for a period of 5 years.

From our investigations we can list the key challenges facing ECG and NEDCO as follows:

1. Government debts owed ECG in excess of US$ 500 Million contrary to the low figure often quoted by Government assignees.
2. The continued non-payment of bills by GoG and state institutions; especially the MDAs and MMDAs.
3. Political interference and infiltrations in the administration of both ECG and NEDCo through the Self Help Electrification Project (SHEP) currently being executed by the Ministry of Power.
4. Managerial and governance inadequacies impacting negatively on staff morale and discipline.
5. Lack of cost reflective tariffs (inherent subsidies not paid by GoG).
6. Inadequate power generated which affects volume of sales and turnover.
7. Transmission/Distribution capacity related challenges and losses.

Our findings also revealed that, there are some Directors of ECG and NEDCo who have resigned and are leading the course to sell/privatise ECG and NEDCo. These individuals are nation wreckers. We have names of these top Directors who have become middle men between MIDA and the Government. These Directors have been promised two times their salaries and other goodies but at the right time will bring their names to book.

As part of the political interference/infiltrations stated earlier, the Government through the Board of Directors of ECG has extended the tenure of office of the current Managing Director (MD), Mr. Robert Dwamena who was due to retire on September 28, 2016. This extension by the Board of Directors is one year from now.

The reasons given by the workers of ECG are that, they have a lot of managers who are vying for that position and if one man overstays it creates chaos downstream, anybody who has been an MD retires at 60 so why is he not going?

SAVE ECG NOW wants to inform all Ghanaians and the general public that, though the above statement by the workers of ECG may be true, that can’t be the entire truth. The Government through the Board of Directors of ECG has extended the tenure of the MD by one year so that, he can assist the government with the Sale/Privatization/Concession which he has started with.

If that isn’t the issue, why the government through the Board of ECG won’t let the MD, Mr. Robert Dwamena go since his retirement is due? Why won’t the government get a new MD and have some of the terms and conditions yet to be listed put in place as a contract?

A new MD may not agree to this move by the Government hence the extension to let him stay for a year more. This was equally confirmed by the Deputy Power Minister, Mr. John Abdulai Jinapor that the ECG Workers cannot call for the removal of the MD whose tenure has been extended by one year.

EFFECT OF THE SALE/PRIVATIZATION/CONCESSION OF ECG AND NEDCo.

Even though the Government has downplayed these reason, we are very confident that the Government of Ghana is not telling Ghanaians the truth. Our findings as SAVE ECG NOW on the effect of the Sale/Privatization/Concession are as follows.

1. Complete loss of jobs for the over 6000 workers of both ECG and NEDCo. Government was able to negotiate for only the first 5 years for workers of ECG/NEDCo to be maintained. Beyond the 5 years, anyone to work with ECG/NEDCo will be on contract basis.
2. Tariffs would be high for Ghanaians to pay. This is because there will be no in built subsidies for Government to pay for Ghanaians. Also, the motive of a private investor is profit maximization and this will be pursued by the investor.
3. Creating a virtual private monopoly in the energy distribution section has the potential of creating danger for the country, in the light of weak regulatory regime. This can be related to how ineffective the PURC will be in the end because MiDA will not allow the PURC to determine tariffs for them.
4. Repatriation of profit by the foreign private investor and the negative impact on the Cedis will be huge.
5. The private investor will not give due attention to rural electrification project which is a social intervention and has been executed by every government under the 4th Republic. This will be a thing of the past.
6. Loss of National Assets to a private investor. These assets will be exclusively be controlled and managed by a private investor.

THE DEBATE OR FREQUENTLY ASKED QUESTIONS ABOUT THIS DEAL.

1. Can ECG and NEDCo be transformed to operate efficiently and profitably so as to meet its obligations to power producers and service providers without Private Sector Participation (PSP)?
2. Is Private Sector Participation (PSP) the only means to achieve the overall goal of the power sector reforms?
3. Why is the Government, IFC and MCC/MiDA much interested in the distribution of section of the Power sector while the other two crucial parts which are Generation and Transmission?
4. Is the concession the best option to bring efficiency and profitability to ECG/NEDCo?
5. Is the single concession of 25 years detrimental to the interest of Ghana?

We strongly believe that ECG and NEDCo can be transformed to achieve the goals without the Private Sector Participation (PSP) in the distribution section of the sector.

This can be done through

1. A disciplined managerial and governance transformation devoid of political interference.
2. Appointing a dynamic and competent leader through a competitive process on a fixed term contract (5 or 6 years) renewable based on performance.
3. A binding contract based on key performance indicators (which can be independently verified).
4. Creating an environment that will enable the Managing Director have a free hand to manage and operate the distribution business on sound business and public service ideals.

WHAT THE GOVERNMENT MUST DO (OUR SUGGESTIONS)

We at SAVE ECG NOW are calling on the Government to stop the sale/privatization/concession now. We therefore, further, recommend the following options to Government to avoid the sale/privatization/concession of both ECG and NEDCo.

1. Government should address the leadership problem by the appointment of a Managing Director for both ECG and NEDCo on specific contract terms subjected to renewable based on performance.
2. Government should provide the same conditions promised the private investor to create the enabling environment necessary to enable any Company to operate efficiently.
3. Government should stop the political infiltrations and interferences.
4. Government should allow adequate time (about 2 or 3 years) to seriously try the Strategic Business Unit (SBU) concept that is being piloted in the Ashanti Region and proper appraisal done after the end of the pilot.
5. Government should list or float the shares of ECG and NEDCo on the Ghana Stock Exchange (GSE).
6. Raise funds from local sources either through the stock Exchange or Pension funds to invest in the energy sector to procure state of the art technology and equipment to eliminate waste in the distribution activities of ECG and NEDCo as well as improve the networks.
7. Government should ensure that power generated and transmitted by VRA/IPPs and GRIDCo respectively are sold to ECG/NEDCo in local currencies and not dollars as the case has been.

COCLUSION
There should be a broader spectrum and other options including measures that will ensure there is sufficient management system in place and an environment devoid of political interference to enable the two companies work efficiently and profitably. The Government has many options to pick the best from and certainly, privatization/concession is not the way to go.

A transformed ECG will be able to generate adequate funds to pay producers of power and other suppliers to ensure smooth running of the sector primarily to the benefit of Ghana and Ghanaians as a whole. We are optimistic that this approach will bring a victory for all Ghanaians.

SAVE ECG NOW therefore calls on the Government to halt any transaction whatsoever aimed at privatizing the ECG immediately for its own good. SAVE ECG NOW would not hesitate to adopt every legal tool or means available at their disposal to obstruct the conclusion of this blatant theft of a vital State assets ie ECG and NEDCo.

We are by this Press Conference calling on all the various political parties to kick against this move by the current government in the Sale/Privatisation/Concession of ECG and NEDCo. These are national assets that must be protected at all times.

Also we would like to alert the Christian Council of Ghana, the National Peace Council, the Catholic Bishops Conference, the National Chief Imam and his Office, the Ahmadiyya Muslim Mission Ghana , the various Regional and National House of Chiefs, the various Traditional Councils across the country, all Professional Groupings/Bodies (like the GBA, GMA, ICAG, CIT etc etc) and all and sundry especially you the media that, the issue of power, ECG/NEDCo must be of great concern to us all. There would be serious ramifications if we don’t act now to prevent the government from doing this for the next 25 years.

Thank you very much for coming and for your attention as well. We are most grateful.

…….Signed…….
Boye Williams
Spokesperson, SAVE ECG NOW
0246902968 / 0276423336
Kwabena Tawiah
Director of Operations, SAVE ECG NOW
0548577291 / 0271819070