IPPs express interest in taking over ECG as new concessionaire

A group of Independent Power Producers (IPPs) has expressed interest in taking over the management of the Electricity Company of Ghana (ECG), nearly 15 months after the government terminated the Concession Agreement with Power Distribution Services (PDS) over allegations of fraud.

In a letter written to the Office of the Senior Minister and seen by Business24, the 12-member group, led by Sunon-Asogli Power Ghana Ltd. pledged to inject the needed capital to turnaround the fortunes of ECG.

In the said letter dated July 21, 2020, the interested IPPs plan to form a consortium that will manage the southern distribution network if given the opportunity.

“As suppliers of the electricity distributed by ECG, and key stakeholders in the electricity value chain with verifiable experience in the generation space, we are open to investing in ECG, given the same conditions granted to the erstwhile PDS,” the letter stated.

The IPPs had earlier proposed to offer technical assistance to mitigate the power distributor’s technical, commercial and collection losses as the government searched for a partner to bring the needed financing to turnaround ECG’s operations.

But checks at the Ministry of Energy reveal that government is yet to respond to any of the expressions of interest by the Independent Power Producers, more than six months after their most recent attempt.

Termination of PDS deal

Ghana and the United States through the Millennium Challenge Corporation (MCC) signed the Ghana Power Compact which made available a grant of $498.2m over a five-year period to improve the power sector.

A private concessionaire, PDS, subsequently took over the management of ECG but the deal was terminated in just six months following the discovery that the Payment Security for the Transaction presented by PDS was invalid.

The government returned the assets and management of the power distributor in the southern sector to ECG, despite insistence by the MCC that the deal should not be abrogated.

The US consequently withheld about $190 million funds granted to Ghana for the 20-year concession from ECG to PDS, but allowed the projects funded through the first tranche ($308 million).

New concessionaire

In November 2020, a former Deputy Minister of Energy in charge of petroleum, Dr Mohammed Amin Adam, said processes were underway to find a new private concessionaire to take over the management of ECG.

He told journalists in Accra that “the new deal, when secured would be announced to the public as part of the government’s efforts to help change the fortunes of the state-owned power distributor.”

Source: Business 24