Ghana signs $498m agreement with U.S.
On the sidelines of the U.S.-Africa leaders summit in Washington, the United States have signed a substantial $498million compact agreement with Ghana , which is the biggest so far for the Obama Administration's investment in energy in Africa.
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The agreement was signed on Tuesday, after the U.S.-Africa Business Forum session of the three-day summit at the U.S Department of State offices in Washington.
The agreement is as a result of the U.S. Government’s Millennium Challenge Corporation deal with Ghana, and at the signing were, among other senior U.S. officials, the Secretary of State John Kerry and chief executive of the Millennium Challenge Corporation Dana Hyde, and Ghana's President John Mahama and his ministers including Ms. Hannah Tetteh (Foreign Minister), Seth Tekper (Finance Minister), Haruna Iddrissu ( Minister for Employment and Labour Relations) and co.
"I am delighted to welcome you here for the signing of Ghana’s $498 million compact with the U.S. Government’s Millennium Challenge Corporation," said Ms Hyde in her opening remarks.
"This agreement represents a major milestone in the U.S.-Ghanaian partnership, and I want to thank both teams, from Ghana and from MCC, who worked tirelessly to develop this investment aimed at overcoming one of Ghana’s key constraints to growth.
"The compact we sign today takes a system-wide approach to transforming Ghana’s power sector. It invests in projects focused on distribution to make Ghana’s energy sector financially viable and capable of attracting private investment, and it funds initiatives supporting greater energy efficiency and cleaner renewable energy.
"These investments will provide Ghanaian homes, schools, and hospitals with access to the reliable electricity they need to thrive. And by encouraging entrepreneurship and supporting the productivity of Ghanaian businesses, these investments will help generate growth.
While revealing the unprecedented scale of the amount involved, Ms Dana hoped that this biggest investment would yield substantial results and benefits for the Ghanaian people.
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She said: "at $498 million, the compact we sign today represents the largest U.S. Government transaction to date under the Obama Administration’s Power Africa initiative.
"In addition, we estimate this $498 million will catalyze at least $4 billion in private investment and activities from U.S. and other businesses in Ghana’s energy sector over the coming years. We also think this compact can serve as a powerful anchor and a platform for overall U.S. assistance and engagement aimed at driving growth in Ghana and throughout West Africa."
The ever-present Secretary Kerry who has virtually been everywhere during this U.S-Africa leaders summit, was excited about the the fact that the U.S furthering their friendship with Ghana on the strength of this latest agreement.
"We live in a different time, a different press of business, but five years ago President Obama went to Accra and he did so to declare that the 21st century will not be shaped just by Washington; it’ll be shaped in Accra as well. And that’s what brings us here today, that reality," he reminded all.
"Ghana’s second compact is another link in the long chain of friendship between our countries. And the first compact helped to pave highways and supported farmers in the export market. This second compact will transform the energy sector and help to provide reliable power with 10 percent coming from renewable resources."
"Many years ago, Ghana sparked an independence movement that swept all across the continent like wildfire. And today, this compact is proof positive that Ghana is once again leading with its commitment to good governance and to economic prosperity."
No one seemed happier than President Mahama, who expressed his satisfaction in the new deal and the benefits it will bring to Ghana. To him, it has not come at a better time to help Ghana's energy crisis.
"It’s extremely gratifying to note that on the heels of the first compact, which came to closure on June 30th, 2012, Ghana was selected to benefit from a second compact that specifically targets the energy sector. No one can deny the fact that energy is the engine of growth that has propelled many of the world’s leading economies into wealth and prosperity, he said. "Ghana is currently experiencing challenges with energy availability, sufficiency, and reliability, and so it was only logical that this new compact would focus on the energy sector."
"The objectives of this new compact is to reduce poverty through economic growth in Ghana with direct interventions in the energy sector. This will not only enhance our own efforts at improving the sector, but would hopefully accelerate it.
This new compact will bring cutting-edge U.S. technology and solutions to expand access to affordable, sustainable electric power."
President Mahama also stressed on the fact that the new deal has brought to Ghana and his Administration challenges that need to be overcome.
"Ghana’s total energy supply has to grow significantly in order to achieve the developmental goals we’ve set ourselves. The main challenge is how to increase the energy supply and also expand the energy infrastructure in the country in a way that is sustainable.
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"The power sub-sector needs to increase installed power generation capacity quickly from the current about 2,800 megawatts today to 5,000 megawatts, while at the same time increasing access to electricity from the current 76 percent to universal access, and all this hopefully by the end of the implementation of the compact.
"We have also been considering how to attract investments to build the necessary infrastructure for the generation, transmission, and distribution of electricity throughout our country. This investment is key to ensuring the sustainable, efficient development of Ghana’s energy sector.
"Our energy policy focuses on institutional and human resource capacity building as well as regulatory reforms required to create a competitive electricity market. Creating the right environment for private-public partnerships in the development of new power plants is essential to the growth of the power sector.
"The biggest obstacle to achieving this objective is the issue of cost recovering, a challenge that our policy tries to directly address. Government is keen to and has already initiated actions towards reforms to attract more private sector participation in the energy and power sectors.
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"These include a transparent framework for the development and management of natural gas resources, movements toward a least-cost transparent process of competitive bidding for power generation, and the allocation and pricing of legacy hydro power.
"We must also achieve an integrated resource and resiliency planning among the generation, transmission, and distribution sectors; transition to a wholesale electricity market; distribution and commercial loss reduction; promotion of energy efficiency and demand-side management; and support for the expansion of renewable energy projects.
"Other pressing near-term action is to improve the creditworthiness of the Electricity Company of Ghana and the Northern Electricity Distribution Company, NEDCo, the nation’s off-takers and distributors of electric power.