ACEP proposes privatisation of ECG through stock exchange
Energy think tank, Africa Centre for Energy Policy (ACEP), is proposing the transfer of at least 51 per cent stake in the Electricity Company of Ghana (ECG) to a strategic partner through the Ghana Stock Exchange (GSE).
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This, ACEP believes, would be a better option than the current concession agreement which workers have kicked against, and have subsequently declared a strike over. While there is a consensus that the company needs reforms through private sector participation to make it viable, what has been lacking is the form the privatisation should take.
The Head of Policy at ACEP, Dr Ishmael Ackah, in an interview on September 8, said if workers of ECG were opposed to the concession option, the government must consider other forms of privatisation particularly a transfer of majority ownership of share (at least 51 per cent) in ECG to a strategic partner selected through an open and competitive process or offload the shares to be acquired through the Ghana Stock Exchange.
“If you are addressing the ECG challenges, then you have to look at the financials, and ensure that whatever decision you take will bring in money to pay the debts and to do investments to reduce distributional losses.”
According to him, the leadership of the workers have already expressed its support for the stock exchange option, and this shows that progress on the privatisation of the company can be made if the government considers other proposals.
“Whilst these issues must be addressed, the choice of a model has been challenging. From our engagement with stakeholders, including the workers of ECG, there appears to be consensus that ECG indeed needs reforms through private sector participation. Where there is no consensus is the form the privatisation should take,” he explained.
Reforms and consultations
The reforms in ECG must be aimed at eliminating government interference, raising capital for the company and introducing new business processes and culture to address the level of inefficiencies and financial challenges of the company.
These objectives, however, he explained, had proven elusive under the current management system in ECG. It is well known that ECG has not provided satisfactory services to consumers of electricity over the years and government interference in the company concerning appointments to the Board and management, as well as its indebtedness to the company are partly to blame for the current state of the company.
He said there was the need for the government to factor the inputs of stakeholders in its options for the privatisation of the company to prevent the opposition that has met its current decision.
“We, therefore, urge government not to reverse its pursuit of the reforms in ECG to ensure quality service delivery to consumers. We however encourage the government to do this with deeper consultations involving the workers, civil society and other relevant stakeholders,” he said.
Addressing concerns of workers
According to him, workers of ECG have expressed concern over their job security under the concession agreement, as well as the repayment of debts owed by the company.
The concerns of workers about job security, according to ACEP, must be addressed but this should not be used to shield workers who cannot live up to expectations.
“Job security must go side-by-side with responsibility. Government, as part of the reform process, must conduct job evaluation of the workers to identify those who deserve to work in the company,” he said.
Under the MCC II, the government has committed to a plan to liquidate its share of the debts of ECG over five years and this, ACEP believes, must be fully adhered to and the government must not fail in delivering on this commitment as that could support the liquidity position of the company.
Impact on consumers
A statement issued and signed by its Executive Director, Dr Mohammed Amin Adam, said consumers have experienced difficulties in accessing services from ECG as a result of the strike declared by workers of the company.
Since the declaration of the strike, consumers have gone through various forms of frustration to access services from ECG, something ACEP considers unacceptable considering the effects of several years of erratic power supply already suffered by industrial, commercial and residential consumers.
He subsequently appealed to the workers to consider the impact of their action on consumers who have not been served well by ECG over the years; and to review their actions to give way to genuine consultations.