ECG-PSP: What Ghana Needs To Do Differently (Opinion)

I have been pondering over the government’s decision to revisit the Private Sector Participation in the Electricity Company of Ghana (ECG). Yes, the government’s decision to reintroduce the private sector participation in ECG has occupied my mind in the last couple of days. Yes, I have been thinking about what needs to be done differently for the proposed PSP to work this time around.

When the Minister designate for Energy and Green Transition, Mr John Abdulai Jinapor, announced the government’s plan to reintroduce PSP in ECG during the Appointment’s Committee vetting, some media houses and social media commentators misinterpreted it to mean outright sale of ECG. However, since I knew exactly what the Minister communicated to the public, I commented on some of the stories on media WhatsApp platforms to correct the false and inaccurate reportage on the matter.

Interestingly, this inaccurate and spreading of false information about the intended plan did not cease, so on Friday, February 21, 2025, when the Minister paid a working visit to the Tema Metering and Regulating Station owned by the West African Gas Pipeline Company (WAPCo) to see the progress of work on their maintenance and pipeline inspection exercise, popularly known as pigging, the Minister siezed the opportunity to speak to Ghanaians through the media present that the government was not going to offer ECG for sale as it is being reported or speculated.

The Minister laid the facts bare that the government was rather seeking a private sector involvement in ECG to enhance ECG’s revenue collection and ensure its financial sustainability.

The truth of the matter is that what the government is seeking to do is not new. It would be recalled that the current President, John Dramani Mahama, during his first term in August 2014, visited Washington DC, United States of America, where he signed an agreement with US development agency, Millennium Challenge Corporation (MCC), to support Ghana’s electricity sector with a grant of $498.2 million to undertake specific programmes and projects to address the challenges in the power sector. For the purpose of those who may not be aware of the previous proposal for private sector participation in ECG, I want to draw their attention to that fact that the Government of Ghana, in 1984, received recommendations from its Consultant SYNEX (of Santiago, Chile), whom it had contracted to study opportunities for reforming Ghana’s Power Sector, among other things, envisaged in its recommendation to the government the introduction of Concession in power distribution sector.

Unfortunately, it took us almost 30 years to revisit the Private Sector Participation in ECG. Per the initial agreement signed by H.E John Dramani Mahama in 2014, the concessionaire was to hold 80 per cent stake and manage ECG for a period of 25 years, while the Ghanaian ownership was to be the remaining 20 per cent stake.

However, in fulfillment of a campaign promise prior to the 2016 general election, President Nana Addo Dankwa Akufo-Addo, upon assumption of office in 2017 and through the Energy Minister, Boakye Agyarko, reviewed the terms by increasing the Ghanaian ownership to 51 per cent share with Meralco Consortium grabbing the 49 per cent stake.

In fact, the journey towards ECG’s concession was not all that rosy. It was met with stiff opposition from both within and out. The first group of people to oppose it under President Mahama’s administration was the Public Utilities Workers’ Union (PUWU) comprising workers of ECG, NEDCO, VRA, GWCL and GRIDCO.

Their perception was that ECG was going to be sold out. They staged series of protests, including press conferences to demand for severance packages for ECG workers because of the privatization move.

Despite assurances, the workers didn’t back down and President John Dramani Mahama lost the December 2016 General Election, and Nana Addo Dankwa Akufo-Addo, was ushered in as the new President of Ghana.

He also kept on assuring PUWU that ECG was not going to be sold out as they perceived, but that would not assuage PUWU’s worst fears as they pressed down the accelerator. They filed an application at an Accra High Court to seek for interlocutory injunction to halt the privatization of the Electricity Company of Ghana (ECG).

However, the court, presided over by Justice Lorrenda Owusu, dismissed the application and intimated that the court’s decision was based on the governing principle of balance of convenience. She further explained that the state had more to lose if the injunction was granted, and the final judgment of the substantive case went in their favour.

The court, consequently, advised both the workers of ECG and government to continue negotiations in order to reach an amicable agreement.

Apart from the legal action initiated by PUWU to halt the concession arrangement, one of the entities that was bidding to manage the Electricity Company of Ghana (ECG), also sued the Millennium Development Authority (MIDA) over what it described as an unfair disqualification in the bidding process.

BXC Consortium prayed the court to order MiDA to stop all forms of ongoing discussion and negotiations with the only remaining company in the ECG Privatization process, which was Meralco Consortium from the Philippines.

Unfortunately, the court, in its ruling, dismissed the injunction case, but granted an injunction to restrain MIDA from drawing on the bid bond.

After these hurdles were all cleared, MiDA set Wednesday, February 27, 2019, for official handover ceremony to usher in Meralco and its partner Power Distribution Services Ghana Limited (PDS).  It was probably the biggest event to happen in Ghana on that fateful day.

The then Finance Minister, Ken Ofori-Atta; William Owuraku Aidoo; Mr Martin Esson-Benjamin, Chief Executive Officer of Millennium Development Authority (MiDA) and some government officials gathered at the cafeteria of Volta River Authority (VRA) in Accra and officially handed over ECG to Meralco Consortium comprising Power Distribution Services Ghana Limited.

It was the expectation of many Ghanaians including myself that this concession arrangement would result in massive turnaround in ECG’s operations and financial sustainability.

Unfortunately, our hopes were dashed a few months later, particularly in October 2019.

What really happened? The Finance Ministry, in a statement issued by Minister Ken Ofori-Atta, on October 18, 2019, among other things, explained the reasons for terminating the concession, citing the issuance of invalid Demand Guarantees for the Concession Transaction. According to him, there was no approval by competent signatories to the Demand Guarantees issued by Qatar-based Al-Koot. The transaction was, therefore, deemed to lack the required authorisation and approval of the company.

With the Meralco-led PDS consortium now dead and another PSP in the process, we should be asking ourselves? What should be done to avoid more embarrassment and shame?

Already, the Minister for Energy and Green Transition, John Abdulai Jinapor, has given indication that a new concessionaire would be selected through an open competitive bidding process. My humble advice would be that each step of the process should be transparent and documents submitted by bidders be scrutinized thoroughly.

Beyond scrutinizing the document, the Government should avoid selecting a single company but rather consider a multi-company approach in the proposed Private Sector Participation (PSP).

The multi-company approach is bound to be more successful than a single-company approach.

By multi-company approach, I meant that the Government should select five companies out of the number of the companies that participated in the bidding process based on their technical expertise and financial strength.

Four of these companies should be made to form two joint ventures (JVs), while the fifth company should be made to stand independently.

To ensure efficiency, I propose that the Government divides ECG’s operational areas into three Zones. Zone 1 should comprise Central, Ashanti and Western Regions while Zone 2 should comprise Eastern and Volta Regions.

The last zone (zone 3) should be Greater Accra only and should be made standalone due to its large population.

Under this arrangement, I propose that the two joint venture (JV) entities should each be made to manage one of the first two groups, while a single company would oversee Greater Accra.

The government should then establish Key Performance Indicators (KPIs) to measure the efficiency and effectiveness of the selected companies.

These companies should be assessed six months after taking over ECG’s revenue collection with a full assessment at the one-year mark. If any company fails to meet the set targets, their contract should be terminated outright.

I am of the strong view that should these approaches be adopted, the ECG-PSP would work. ECG should return to profit making like Kenya Power and Lighting Company (KPLC) which declared a net profit of Ksh 30.5 billion ($235,723,244.97)  for first half year 2024 and Ksh9.9billion ($76,522,916.49)  for the second half 2024 and paid dividend to its shareholders.

The author serves as the Executive Director of Energy News Africa Ltd. With over 15 years of experience in journalism, he has also pursued advanced studies in energy economics, completing an MSc program at the Ghana Institute of Management and Public Administration (GIMPA). He is currently awaiting thesis submission for graduation.