Ghana Power Compact will banish ‘dumsor’ - Says MiDA

The Millennium Development Authority (MiDA), the agency that implements development compacts that Ghana signs with the United States of America (USA), says it is set to start the implementation of the second compact which focuses on power supply.

The Chief Executive Officer of MiDA, Mr Owura Kwaku Safo, told a section of the media in Accra on October 7 that within weeks, the transaction advisor will complete the Transaction Structure Report which would spell out the requirements for inviting a concessionaire to take over the operations of the national power distributor, the Electricity Company of Ghana (ECG).

The structure of the transaction report would form the basis on which the International Finance Corporation (IFC) of the World Bank and the transaction advisor would prepare the tender document to invite proposals from interested investors.

The CEO of MiDA insisted that local companies with proven track record could participate in the process.

“We would urge all interested parties, particularly Ghanaian indigenous companies to take up the challenge and quickly submit their letters to express their interest in this venture,” Mr Safo stated.

MiDA officials were upbeat that the interventions under the Power Compact would “play a critical role in banishing DUMSOR from the power landscape in Ghana in the medium term, so that it does not rear its ugly head again in the future.”

The Ghana Power Compact, the country’s second grant support from the Millennium Challenge Account (MCA) of the USA, seeks to implement multi-faceted interventions to address the root causes of rigidities and inefficiencies in the power sector by leveraging private capital and expertise to improve power generation and distribution in the country.

The private concessionnaire which takes over the operations of the ECG would have the opportunity to do so for between 20 to 30 years. MiDA CEO explained that is to ensure steady injection of capital by the investor.

Projects under Compact

The second compact which comes with a US$300 million grant would address six broad thematic areas within the country’s power value chain. They include the ECG Financial and Operational Turnaround Projects for the ECG and the Northern Electricity Development Company (NEDCo); Access Project to address access to power and a project to strengthen the capacity and regulatory framework of the power sector.

The rest are the Power Generation Sector Improvement Project, as well as the Energy Efficiency and Demand Side management Project.

Mr Safo said at the general outcomes of the project included reforms to power distribution sector to encourage and attract Independent Power Producers. This is expected to increase generation and improve reliability of distribution system.

The distribution sub-sector alone, he said, needed average investments of US$200 million a year to build a robust system, funding which the government alone could not shoulder, hence the need to partner with the private sector to inject some fresh capital.

It would also ensure the provision of reasonably priced fuels in sufficient quantities for power generation.

Here, the CEO of MiDA explained that the Compact spelt out how to process the country’s gas resource and make it available for power generation, while at the same time building the eco-system for the increased use of liquefied natural gas (LNG) to augment local gas, where necessary.