Ghana Weighs Three Options For Private Sector Participation In ECG, NEDCo

Ghana’s energy sector stakeholders have proposed three options for the government to consider in introducing Private Sector Participation (PSP) in the power distribution sector.

A seven-member technical committee constituted by the Energy Minister, John Abdulai Jinapor, to solicit the views of Ghanaians on the government’s plan to introduce private sector participation in both the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo), submitted its report on Wednesday, April 2, 2025, highlighting the three options for consideration.The three proposed options are:

1. Entity Concession, where the whole distribution business would be given to a private concession as one whole concession.
2. Multiple Lease, where power distribution across the country would be divided into several parts and awarded to private operators.
3. Service Franchise, where the private sector would operate the network, the low voltage network from the distribution transformer to deliver services to the homes.

These options seek to improve the efficiency of power distribution in Ghana.

The government will evaluate these proposals and select the best option for PSP in ECG and NEDCo.

Speaking at the event, Mr John Abdulai Jinapor, expressed his appreciation for the committee’s diligent work and noted that the government was committed to creating a conducive environment for private investment in the power sector.

The Minister emphasised that addressing the current inefficiencies and enhancing energy distribution remain top priorities of government to meet the growing demand of the sector.

“All we want is a reliable, affordable and dependable supply of electricity,” he stated.

The findings of the report stress the need for regulatory frameworks that support private sector engagement while ensuring consumer protection and fair pricing mechanisms.

Furthermore, it suggests that strategic partnerships between government and private entities can leverage new technologies and innovative practices, potentially transforming the sector.

Mr Jinapor reaffirmed that the government was not going to sell ECG or NEDCo.

The Chairman of the committee, Mr Jabesh Amissah-Arthur, said the committee consulted 285 individuals and 35 organisations in the two-month period.

Also, he noted that the group had identified nine major challenges that were impeding the performance of distribution utilities in the country, adding that the challenges were categorised into four groups.

“The first group has to do with the administrative set-up of ECG, and we see problems with governance, management malaise, and procurement problems,” he said.

Additionally, Mr Amissah-Arthur highlighted that operational issues were also hindering the performance of ECG distribution function, which included high losses in both commercialisation and collection, and high losses in terms of technical and unaccounted energy.

Furthermore, he indicated that there was a widespread customer dissatisfaction with the services they were receiving from the distribution utilities across the country.

Prior to the submission of the committee’s report, the Executive Director of Energy News Africa, Mr. Michael Creg Afful, in an article cautioned against handing over ECG to a single company.

He suggested that government should consider a multi-company approach in the proposed Private Sector Participation (PSP).

According to him, the multi-company approach was bound to be more successful than a single-company approach.

By multi-company approach, he 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.

Mr. Afful said 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, he proposed that the government should divide 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.

He stated that the last zone (zone 3) should be Greater Accra only and should be made standalone due to its large population.

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

Mr. Afful advised that 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,” he suggested.

Source: https://energynewsafrica.com