Privatise or restructure ECG
There has been extensive, sometimes heated, debate on whether the Electricity Company of Ghana (ECG) should be privatised.
Advertisement
Those who argue against privatisation hold the view that it will come with retrenchment and that represents a threat to employees of the company.
They also argue that the desire for higher profits may lead to the charging of higher tariffs for the services provided by the ECG.
Another argument is that privatising an important state enterprise such as the ECG is generally not in the interest of the nation.
Meanwhile, the power crisis facing Ghana is not solely attributable to power distribution; rather, the entire energy sector is facing a challenge.
The debt levels of the ECG and the Volta River Authority (VRA) pose a significant threat to government revenue, unless steps are taken to control the debts.
For a long time now, the ECG, the VRA and the government in general have been indebted due to the way our energy needs and resources have been managed.
The bane is that governments have not stood by their word to allow the free operation of the automatic adjustment formula for utility tariffs, a situation that has led to piles of debt on government books, which has pushed the country’s entire debt portfolio to about 55 per cent when expressed in terms of the total value of goods and services produced within the economy.
Divesting government’s interest in the ECG can, therefore, lead to significant revenue for the government and the elimination of waste in the system.
It is the considered view of the Graphic Business that the ECG cannot be left to its fate the way it stands now; it should be privatised, restructured or recapitalised with multiple financing alternatives.
The ECG currently buys electricity from the VRA at a bulk rate and retails the electricity to customers. With privatisation, the power distributor, just like mobile phone companies, can step up its game and compete for the business of retailing electricity, which is now monopolised by the ECG.
In Nigeria, power distribution and generation are privatised and this has brought hope to Nigeria’s energy generation and distribution front.
You see, the story of Ghana Telecom, now Vodafone, is soon forgotten because the divested company is now doing very well. It is now in serious and proper competition with its peers, which had a head start.
The GRAPHIC BUSINESS believes that with proper privatisation with benchmarks, targets and timelines, an ECG privatisation should yield some of the best outcomes.
Indeed, staff of the company have much to say. There was a time when ECG had a project manned by Americans. It was not only significantly successful; staff who worked on it were very well trained to be results oriented and take their jobs seriously as though it belonged to them.
Today, those workers on the project, who have since been integrated into the company, have a better disposition and attitude to work.
As a country, we have a good experience with divestiture. For instance, most Ghanaians will agree that the services we are getting from Ghana Telecom under Vodafone as the majority shareholder are better than when GT was 100 per cent state- owned.
So it is with Westel, which later became Zain and is now Airtel. By opening up the telecom industry, we now have stiffer competition and consumers are the beneficiaries.
Ghana stands to reap huge benefits should electricity distribution be privatised to conform with the generation side, which is already privatised.
It is the view of the Graphic Business that as a country, we should manage our affairs to benefit the majority of Ghanaians. If privatising the ECG and the VRA is what will make our energy sector more viable and efficient, then the government should take the bull by the horn and go for it.
Advertisement
Similarly, it can look for strategic investors, with local partners, inject some capital from development finance institutions and form a solid board that will manage the company into profitability.
The power distributor is currently doing its bit, but there is still a long way to go, part of the challenge blamable on the government and politics.