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ECG needs $1bn investment

March 1, 2017, 3:09 p.m.

- In 5 years -Agyarko  

By Elvis DARKO, Accra

ENERGY Minister Boakye Agyarko says the Electricity Company of Ghana (ECG) requires a minimum of $1billion investment in the short to medium term, representing between three and five years to resolve distribution problems and guarantee stable power to consumers.

He said the money would be invested to replace obsolete infrastructure, such as lines, transformers, substations, among others.

According to him, even though the country achieved sufficient generation as at yesterday, distribution challenges may result in isolated power cuts.

Speaking to The Finder, Agyarko said ECG is responsible for most of the distribution challenges because the company has not had the necessary investment to maintain plant and equipment.

According to him, due to weak infrastructure, ECG feeders go off the moment the country experiences a storm.

He blamed the situation on focusing investments in thermal plants for generation capacity at the expense of investment in ECG.

Agyarko explained that if government pays all its debt to ECG, that money would, in turn, be used to pay generation companies that ECG owes.

Therefore, he said, the country needed to come up with ways to raise the $1bnillion to invest in ECG to restructure it to attract investment since the company is currently not operating as a healthy corporate.

He stated that ECG cannot raise capital to invest since it is not in the position to generate enough revenue to pay back.

Ethiopia example

Agyarko gave the example of Ethiopia where, he said, citizens were taxed to make monthly payment into a fund to support the construction of a hydro dam.

He further explained that the government borrowed to build the dam using the proceeds of the fund as security for the loan.  

ECG records 30% systems and distribution losses

Currently, the ECG is estimated to lose over 30 percent of its revenue through systems and distribution losses.  

According to experts, these losses translate into about $200 million per annum.

Korean records 3.6% systems and distribution losses

In contrast, Korean Electricity Company is rated as the number one utility company in the world and their transmission and distribution losses is about 3.6%.

$12 billion investment needed in 10 years in energy sector

It is estimated that between $8 billion and $12 billion would be required by the country for new power generating plants in the next 10 years to ensure reliable power.

Ghana Power Compact

Under the Ghana Power Compact signed in August 2014, the country is to receive a total of $498.3 million grant from the United States Government, through the Millennium Challenge Corporation, over five years.  Ghana is complementing it with $37.4 million.  

$350 million for ECG

About $300million of the MCC grant is being invested in ECG and the Government of Ghana is committing at least $37.4 million of its own money.

The project seeks to bring about Private Sector Participation (PSP) in investments into the ECG as well as the management and operation of the facility through a concession arrangement.  

ECG workers

Workers of ECG have kicked against the concession resulting in a stalemate that the new government has to address.