Since the announcement of the Electricity Company of Ghana (ECG) concession deal by the government of Ghana, there have been various debates as to whether or not the deal is right.
Today, I carefully sift through the rubble to break them down to you.
As we move along, ask yourself, “what at all is wrong with the Ghanaian? Is it our educational orientation? Are we paying for the sins of our forefathers? Or we are simply here to glorify the skins other than black? Follow this objectively!”
The government of Ghana agrees with all Ghanaians that there is a more efficient way the Electricity Company of Ghana can operate. This is a positive reflection of the company. It is also positive that the government is seeking hands or ideas to resolve the distribution challenge in the energy sector.
But wait! What did the government or the Millennium Challenge Compact say is the problem with the ECG? Non collection or under collection of bills, operational cost is too high and frequent power outages. Good! Who owes the company the more?
1. Government is the chief debtor to the ECG. The ECG is what it is because of government’s huge indebtedness to it. Often, the Finance ministry issue out monies to settle some of the debt. But consider this! Government uses the power and pays for it later.
In fact, 40% of ECGs power is consumed by government and its agencies. So government uses the power today and pays for it in 2017. That’s what it is! Where on earth is this business model working? Where should ECG get the monies to buy power from VRA and GRIDCo for it to be consumed by government? Forget about the other economical excuses!
You and I are quickly disconnected when we fail to pay for our bills for even a month. How many months does government owe? Plenty! Yet the same government is sitting on the fence accusing ECG of none or under collection of bills.
2. There is no evidence, neither has Ghanaians been told that VRA and GRIDCo has power in stock but the ECG has not been able to distribute it. So why will anybody blame ECG for the frequent power outages? What VRA produces is what ECG sells. That’s what it is! If it’s about losses after supply from the GRIDCo, that’s a different case.
Aside that, we all know, including the president, HE John Mahama that there is low production capacity of which he [the president] is seeking to resolve by opting for the deadly killer coal fired plant at Ekumfi Aboano. So why this hypocrisy?
3. If my memory serves me right, the president in his 2015 state of the nation address, admitted that “the current power situation is as a result of generation capacity”, he did not say it is because of the ECG, so why let it seem that it is the dumsor that has triggered this move to give ECG out on concession?
4. Why will the government of Ghana commit to paying its debt it owed the ECG in a five year period when the ECG is giving out on concession, but is not ready to pay its debt to the ECG in a similar arrangement?
This is where it gets scarier, dangerous and mind boggling.
While you prepare to know the sad implications of the Millennium Challenge Compact II agreement from the United States, try and reflect on activities before and during 6th March 1957. Reflect on why our forefathers did what they did to secure us political independence. Reflect on what the true and patriotic Ghanaian is made of.
Now look at this.
1. Article 7.1 of the compact agreement states that; and I quote “…the government [of Ghana] will proceed in a timely manner to complete all of its domestic requirements for this Compact to enter into force. The Parties understand that this Compact and the PIA, upon entry into force, will prevail over the domestic laws of Ghana.
Really? An International law prevailing over our domestic laws including the constitution? Like seriously? I see. Well you may be late to get this through because the 1992 constitution of Ghana says at Article 1 clause 2 and I quote “The constitution shall be the Supreme law of Ghana and any other law found to be inconsistent with any provision of this Constitution shall, to the extent of the inconsistency, be void.
Question: Why will a contract, an international one, so to speak, say to a sovereign state like Ghana that, that contract is supreme than any domestic law including the constitution of Ghana? Did the government’s technical team on compact II read this part of the contract and agreed to forfeit the constitutional provisions? What then is the meaning of our independence? What did our forefathers fight for? Where then is the identity and integrity of the sovereignty of Ghana? Come on!
2. Energy is everything in the 21st century. This is beautifully articulated by president Obama who said that and I quote “any nation that is unable to control its energy supply is unable to control its destiny”. So then, why will the US government turn around to sign a compact agreement [Compact II] with Ghana compelling us to give control of our energy distribution to a foreign private monopolistic entity from Italy or France or elsewhere? Is that not we selling our destiny?
3. How come a company which will only be managing the distribution business of ECG be selling power to other countries, when in fact, the generation of power locally is challenged? Why is the company only interested in distribution and not generation of power? Where will the company get the power to supply to other countries? Is it the little we have that will be given to other countries?
4. Let’s move on. Which survey has been carried out by independent bodies to suggest that Ghanaians can pay for electricity when the tariffs are increased by 40%?
[The possibility of increase in tariffs is inferences from the additional parameters to the tariff setting guidelines such as lease payments and guaranteed return on equity to the private investor. [Basically this shows that more determinants to setting utility tariffs are added].
Fact again is that, the private investor is highly likely to demand for realistic tariffs. Consider this: You remember what the PURC brought as tariffs in December 2015? The over 100% increase [for water and electricity] earlier suggested by the PURC was slashed down to the 59 and 63 or there around respectively after political and social pressure mounted on the government]. Well, this social and political pressure WILL NOT wash when the ECG is given to a private hand. And if government fails to comply with tariffs like it did in December 2015, the private investor can go to court or international arbitration to compel compliance with the Tariff Methodology]. Surely tariffs will increase. Externally, Google or read about Uganda’s similar concession and you will notice that for over 10 years into the concession, tariffs are neatly high.
5. Moving on with that, do we assume that power will be so expensive so much such that, locals cannot afford it and that it will be sold to neighboring foreign countries which will buy? Food for thought!
6. Let’s go on. Another thing is mind boggling! Is it really true that the $492.8 million Millennium Compact Challenge money will be invested in Accra/Tema and Kasoa arrears only? Why? What is it in there at Kasoa, Accra et al? Is it because this is where it is going to be more profitable? Is it really where we need money injection? Really? Only a small fraction of the Central and Greater Accra Regions? Two regions out of the 10? Why are we doing this to ourselves, MiDA? How will you respond to people who say that this compact is coming to milk us dry? Do we assume that any part of the country that does not have electricity will not have electricity for the next 25 years when this agreement is in force? [This is also based on analysis from pure business principles; which business entity will spend resources on activities (rural electrification) that the returns will not cover the cost of those activities?]
7. More questions, probably final point for now. This borders on transparency. If the Millennium Development Authority MiDA and the MCC are clean in their minds, are transparent and have nothing hiding, why are they not publishing the Financial and Value for Money models used by the World Banks’ IFC and MiDA to conclude that ECG needs to be given to a private hand? Again, since this undisclosed models were used to do the analysis somewhere in 2012, can we still say the ECG then is still the ECG now in 2016? MiDA and IFC, I know you are reading, why are you not publishing the models so that journalists and CSOs can all read? More surprisingly, MiDA, is it true that you did not give a copy to the Finance Ministry when it requested for it? Is it true? If it is, why? MiDA and IFC why?
Before I rest my case, Ghana Institute of Chartered Accountants, are you there? Please can you do the public some good to offer us thoughts into understanding the financial meaning of a 25 year Finance Lease and its implications for the private investor and the ECG? Your effort I believe will help shape the conversation.
For MiDA, I am keenly waiting to read your statement to clarify these mind boggling questions. Until then, join the campaign to say NO to the ECG concession!
By: Obrempong Yaw Ampofo/citifmonline.com/Ghana