ECG workers kick against concessional arrangement

Workers of the Electricity Company of Ghana (ECG) have kicked against the government’s decision to give the company to a private entity under a concessional arrangement.

They said they believed that the main objectives that the government sought to achieve could be reached without giving the company to a foreign entity under a concession.

The workers’ position, contained in a position paper published in the Daily Graphic of July 22, 2015, stated that “the workers of ECG wish to state categorically that we have never supported any form of privatisation of ECG and that we believe our country Ghana has enough brains and the capacity to manage the company profitably without giving it out to any foreign entity”.

They alleged that a communication team constituted to educate stakeholders on the need to privatise ECG was creating the impression that workers of ECG were in support of the government’s decision to go single concession with the company that would last for more than 20 years.

Contentious issues

“What is disheartening is the fact that there is a ECG top management member on the communication team, who, among other contentious issues, is postulating that the company cannot be viable unless privatised,” the workers alleged.

The major problem facing the energy sector at the moment, which had brought about the load management (dumsor), they said, was inadequate supply of power for ECG to distribute.

“It is, therefore, presumptuous that just by giving ECG out on concession will address the challenges facing the energy sector,” they said.

They held that until the fundamentals affecting the effective operations of the ECG were addressed, no private entity, irrespective of its level of technical and financial capacity, would be able to operate efficiently in the distribution section of the energy sector.

The government has decided to consider the option of privatising ECG based on recommendations made by the International Finance Corporation (IFC) of the World Bank to the Millennium Challenge Corporation (MCC) that the best option to address challenges in the energy sector is to introduce private sector participation in the distribution section of the sector.

Two options were presented: either concession or partial privatisation of ECG, and the government has chosen to give the company out on concession.

“Under a concession, the state will enter into a contract with the private partner where the private partner will have the exclusive right to operate, maintain and carry out investments in ECG for a given number of years, normally above 20 years,” the paper explained.

According to the workers, the factors militating against the efficient running of ECG were the failure of the government to pay debts for utility consumed by state and governmental agencies, inadequate tariff structure, governmental and political interference, especially in the handling of the Self-Help Electrification Project (SHEP) by the Ministry of Power, and inadequate power available for distribution.

Alternatives

They provided other options that could be pursued, positing that listing the ECG on the Ghana Stock Exchange (GSE) could raise the needed capital to support its operations.

They described the assertion that the company had to be transformed before it could be listed as a farce.

Another option, they said, was for the government to leverage funds from the Social Security and National Insurance Trust (SSNIT) and second tier pension funds, as was done in the developed countries where such funds support industry for economic development and job creation.

The position paper said the government had recently directed ECG to start the implementation of a strategic business unit (SBU) concept which was being piloted in the Ashanti Region aimed at enhancing operational efficiency and profitability.

“Government should allow this project, which is on a two-year pilot, to run and assess the impact before rushing to implement any PSP option,” they advised.

They held that there was a great possibility that through the SBU concept, the operational efficiency and profitability of the ECG would be enhanced without selling such a vital national asset to foreign or private interests which would not inure to the benefit of the country in the long term.

Minister of Power

While preferring not to respond to the workers’ concerns because he had not read the advertiser’s announcement, the Minister of Power,

Dr Kwabena Donkor, however, wondered why the workers were making references to government's indebtedness to the company, reports Della Russel Ocloo.

"What they forget about the so-called government indebtedness is that the government has guaranteed a loan for the ECG which the company is unable to pay and the Ministry of Finance has to service it using waivers,” he said.

When asked about the union's proposition for the government to look for genuine home-grown solutions to address the power challenges, as against privatisation, the minister retorted, "If they are talking about genuine home-grown solutions, why can't they propose one?”

"They have had these problems sitting with the company for over two decades so what are they talking about? he asked.

Writer’s email: victor.kwawukume@graphic.com.gh