ECG concession will lead to electricity tariff hike – Minority

As the concessionaire in the privatization arrangement of the Electricity Company Ghana (ECG) prepares to take off next month, the Minority is predicting a more than 50 percent increase in electricity tariff.

According to Ranking Member on the Mines and Energy Committee of Parliament, Adam Mutawakilu, the reduction in electricity tariffs by the New Patriotic Party (NPP) administration has plunged ECG into colossal debt which will require a 60 percent increment in order to sustain operations of the concessionaire, Meralco.

The Millennium Development Authority (MiDA) has indicated that the new entity is set to begin operations with the power distributor in February 2019, but speaking to Citi News, the Damongo MP said Ghanaians must be ready to pay more for power.

“The first half year of 2013, the Electricity Company of Ghana recorded a loss of GHC 1.1 billion which they say is expected to hit 2 billion as at 31st December, 2018. Now if a private sector comes in, it will not be willing to absorb this under-recovery. Now most of these IPPs are paid in US dollars.”

“However Electricity Company of Ghana collects its revenue in Ghana cedis so if there is a depreciation of the cedi against the dollar, you expect ECG to use Ghana cedis to pay for the same dollar value. So if you factor this into the tariff structure, then electricity tariff will go high.”

The agreement between Meralco Consortium and the government of Ghana was laid before Parliament earlier in 2018 by the then Energy Minister, Boakye Agyarko.

As part of the agreement, the concessionaire will invest over US$ 580 million over a 5-year period into the ECG to improve on the performance of the company.

The announcement followed the disqualification of some investors who expressed interest, including BXC Consortium.

Per the compact, the Millennium Challenge Corporation is expected to inject about $418 million into ECG, while Meralco will invest about $580 million.

Details of Compact II

Under the Power Compact, six projects will be implemented to address the causes of the unavailability and unreliability of power in Ghana

The plan includes the ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.

The rest are Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.

The Government of Ghana signed the Ghana Power Compact with the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington on August 5, 2014.


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