As government works to replace the botched Power Distribution Services (PDS) deal through restrictive tendering, an Economist and Rsk Analyst has offered some advice on the way forward.
Dr Theo Acheampong, also a senior fellow at think tank, Imani Africa, has proposed to the government to seek local institutional investors in its bid to privatise the Electricity Company of Ghana (ECG).
“If we really want to turn around ECG given that the MCC [Millennium Challenge Company] money will not be coming anymore, then we have to look at other ways of financing and I think that if we look domestically within Ghana we have institutional investors,” he said Saturday on Joy FM/MultiTV’s current affairs programme, Newsfile.
In the long term, an Initial Public Offering (IPO) may even become necessary, said Dr Acheampong.
The Ghana Infrastructure Development Fund, according to Dr Acheampong, is a local institutional investor fit to pitch some money and take some shares in the electricity distribution company for the country’s southern sector of the country.
Government is racing against time to find new private managers for ECG following the termination of the controversial PDS concession agreement over irregularities.
A letter signed by the Finance Minister, Ken Ofori Atta, recommended a restricted tender process to replace PDS.
Photo: Finance Minister, Ken Ofori Atta
A restricted tender, the Minister hopes, will beat the “limited time” available before the Compact II Programme between the government of Ghana and the US expires.
The government of Ghana’s 25-year power concession deal with PDS came to an abrupt end after the government terminated it following controversies surrounding the demand guarantee PDS submitted to Ghana before taking over the assets of the Electricity Company of Ghana.
Until the termination of the deal, TG Energy Solutions Limited, a lead local consortium sponsor, Santa Baron Ventures Limited, a local technical lead, GTS Engineering Services Limited, a local financial lead and TBK Ghana Limited, a local financial sponsor, held a total of 51% of the shares of PDS.
With the United States announcing a decision to withdraw $190 million to Ghana following the PDS deal termination, the way forward for Ghana under the MCC Compact II Programme looks uncertain.
Dr Acheampong said Ghana would not even need to worry about financial support for the country’s power sector from the United States if it took the right decisions.
“Beyond just providing the financing, I think what is really important is that we need new management at ECG and a new management that will be able to turn around the fortunes of the company.
“The management would have to define KPIs. So I would, for example, want to see…the remuneration of the management besides their ability to reduce financial and technical losses over three, four, five years and that would be more fundamental than providing money to turn around the operations of ECG,” he told Newsfile host, Samson Anyenini, via a phone call.
Watch the video below for more of Mr Acheampong’s submissions on the way forward for ECG.