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Gov’t must review ECG agreement

The Coalition of Stakeholders on the Electricity Company of Ghana (ECG) Concession Arrangement (COSECA) has called on the government to amend the Millennium Challenge Compact (MCC) II to prevent the outright take-over of the company.

Instead, the coalition proposes that the MCC should be amended to a joint venture arrangement that will allow ECG to exist and be part of the power distribution system in the country.

A member of the coalition, Dr Steve Manteaw said that after a stakeholders’ forum, it was agreed that although the Compact II in itself was well intended, its design and mode of execution, especially as it relates to the ECG concession, its structure, and proposed implementation arrangements were fraught with several weaknesses.

He explained that under a JV arrangement, ECG would be able to retain its distribution function, while rights of Staff would also be protected.

“The consensus reached during the discussions is that the agreement should be amended to change the outright take-over of ECG by concessionaire, to a joint venture arrangement which allows ECG to exist and be part of the power distribution system.”

“ECG may retain the distribution function with or without a partner, and also participate as a JV partner in the supply or retail phase. This also allows staff to retain their ECG employment with all their CBA rights and Union representation and still be seconded to Private Sector participant without issues of redundancy or severance arising,” he said.

Other concerns

The COSECA, in a communique was of the view that a total review or re-structuring of the whole deal will help arrive at a meaningful result for Ghana.

However, if there is no opportunity for such major review, then consideration should be given to the option of forfeiting the amount and finding alternative solutions to the problems bedevilling the national power distributor.

The group also recommended that another option worthy of consideration was to list ECG on the Ghana Stock Exchange.

“The second option is to follow the example of the GCB Bank Limited and Ghana Oil Company Limited (GOIL) which were in a similar situation as ECG but have been transformed through restructuring and listing on the Ghana Stock Exchange,” the communique said.

On the issue of promoting local content, COSECA recommended that the current arrangements in the Energy Sector which allows for local industry (such as transformer companies, wood pole and meter manufacturers, cable companies, to supply key material requirements of the ECG should be fully incorporated in the Request for Proposal (RFP) as an additional provision to the proposed partnership between the private participant and a Ghanaian company in the RFP.

Dr Manteaw in an interview said the tenure of the concession was too long, and rather, a short-term duration should be looked at.

“The current arrangement considers a tenure of 25 years and a major review after 15 years. The coalition is of the view that the wide duration specified for the concessionaire will not permit the effective monitoring and modification of structure in the short term if there are structural defects or challenges. A five-year term, as was the case of the Aqua-Vitens-Rand water management contract, with the possibility for extension is a better option,” he explained.

Hints of review

The communique adopted by the Coalition of Stakeholders on ECG Concession Arrangement (COSECA) after the forum raising concerns about technical and legal flaws in the MCC compact II and the ECG Private Sector Participation (PSP) programme has been presented to presented to the President, and to the Minister for Energy and Petroleum.

The concerns expressed by the Coalition, he said, had been well received and the Ministry for Energy and Petroleum was currently engaging with other stakeholders on the matter. 

Sources close to the Ministry, have however hinted of a likelihood of the ECG concession being reviewed to address the stakeholder concerns that have been raised. — GB  

Source: http://www.graphic.com.gh/business/business-news/govt-must-review-ecg-agreement.html

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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