Improve efficiency of ECG or loose contract… PDS urged

Adnan Adams Mohammed

Power Distribution Services (PDS), a subsidiary of Meralco consortium which has taken over the management and operations of the ECG, is expected to improve the operations of ECG and return the company to profit in a short period to help reduce government’s subvention in the electricity companies as a cushion to consumers.

Government will waste no time in reassuming the operations of the Electricity Company of Ghana (ECG) if the new managers, PDS, fail to meet their key performance indicators, the Minister for Energy, John Peter Amewu has strongly indicated.

The ECG private sector participation activity is one of five key projects activities that make up the ECG Financial and operational turnaround project under the US$498 million Ghana Compact two programme. The project is designed to strengthen the governance and management of ECG as well as undertake infrastructural and foundational investments designed to reduce technical, commercial and collection loses while improving service quality.

By this, PDS is expected to improve revenue collection, cut cost, and maintain stable power for two decades while injecting over US$500 million in to the power distributor.

The Finance Minister, Ken Ofori-Atta was hopeful that with the takeoff of the PSP, government subvention in ECG will gradually reduce.

“We expect that this agreement will slowly remove the government support for ECG to make the company strong enough to stand on its own”

But, Mr. Amewu speaking at a handing over ceremony in Accra, last week, stated that, the operations of PDS will closely be monitored to ensure performance delivery.

“I wish to ensure the concessionaire, PDS that I am going to keep my eagle eye on the key performance indicators set out on the transaction agreement, and for some reason all those challenges enumerated above on any single occasion during the that you are expected to deliver effective service will come undone, an exit to the door will clearly be an option” he said.

Per the power compact transaction agreement, Meralco and its partners will hold 41% stake in ECG while the Ghanaian ownership is 51%.

Under the current deal, ECG will remain an assets owner and bulk power supplier while PDS is expected to be responsible for power distribution services.

The Vice President of Meralco Philippines, Ireneo Acuna was of the view that the revision of shares from 20 percent local participation to 51 percent was is a laudable initiative taken by the Nana Addo government.

“When the second bidding conference was done and the government said they want to increase the local participants, we were the only company that was excited because we believe in that,” Mr. Acuna said.

PDS is a consortium of Ghanaian and two foreign companies. The Ghanaian component consists of TG Energy Solutions with 28 percent shares, Santa Power Ltd with 13 percent shares, and GTS Power with 10 percent shares. The others are Manila Electricity Company with 30 percent shares from the Philippines and Aenergia from Angola with 19 shares.

Ghana signed the Power Compact with the United States of America, acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.

Under the Power Compact, six projects were being implemented to address the root causes of the unavailability and unreliability of power in Ghana.

The project includes ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.

The rest are Power Generation Sector Improvement Project, and Energy Efficiency and Demand Side Management Project.