Government has presented to Parliament for ratification and subsequent implementation the Electricity Company of Ghana Private Sector Participation agreements with an assurance that workers of the energy distributor would not suffer involuntary redundancy.
The Millennium Development Authority (MiDA), in April announced Meralco Consortium as the preferred bidder to manage the technical and financial operations of the ECG.
Government introduced a new policy which required that any company that win the bid must have a 51% Ghanaian ownership in the structure of the concession.
This led to some of the companies abandoning their interest in managing ECG under the Millennium Challenge Compact II.
“The overall goal of the Compact is to reduce poverty through economic growth in Ghana through increased private sector investment and increased employment opportunities for men and women”, disclosed Boakye Agyarko, Minister of Energy when he addressed the media yesterday.
Under the Compact II, the United States Government is to disburse a grant funding of up to US$498,200,000.00 (Four Hundred and Ninety-Eight Million, Two Hundred Thousand United States Dollars) over a 5-year period. The funding from the US Government is to be disbursed in two tranches comprising: US$297 million in Tranche I and US$190 million in Tranche II. Tranche II will be disbursed between the 3rd to 5th years subject to meeting all the Conditions Precedent (CP), including successful selection of an Acceptable PSP Provider to ECG.
The Government of Ghana is to provide direct counterpart funding of US$37.36 million being no less than seven and one half percent (7.5%) of the amount of MCC Funding provided under the Compact. In addition, it is estimated that tax exemptions over the 5-year Compact-term will be about US$133.9 million.
The Compact is governed by the principle of international law and allows for either Party to terminate the Compact without cause in its entirety by giving the other Party thirty (30) days prior written notice. It also allows The Parties to amend the Compact only by written agreement. They (The Parties) could make any modification of any Annex, or to any other provision of the Compact without need for further action by the GoG (including any parliamentary action), or satisfaction of any additional domestic requirement of Ghana.
According to the Energy Minister, the NPP Government upon assumption of power realized that there was the need to address a number of challenges regarding the way and manner the ECG PSP was being implemented. “The workers of ECG and other key stakeholders had raised a number of issues with the ECG PSP process”
“The NPP Government promptly engaged the workers and the stakeholders leading to important changes/revisions to the ECG PSP arrangements.
After inheriting the Compact II and upon thorough review of the ECG PSP, the NPP Government decided to align the transaction arrangements to the vision of the party”
The renegotiated agreement “Increased the Ghanaian participation from 20% to 51%; Shortened the term of the concession from 25 years to 20 years” he revealed.
“The employees will be transferred to the new company on terms and conditions that are equal to or better than those they are currently engaged by ECG” he added.
The concession arrangements and the associated transaction agreements have been revised to reflect these decisions.
According to him, the NPP Government is committed to developing the Ghanaian private sector businesses to enable them provide the necessary impetus to grow the national economy.