Workers of the Electricity Company of Ghana (ECG) are up in arms against government over attempts to trade off the company into private hands.
In an advertisers’ announcement, they said “the workers of ECG wish to state categorically that we have never supported any form of privatisation of ECG and that we believe our country Ghana has enough brains and the capacity to manage this company profitably without giving it out to any foreign entity.”
That was after claims by the National Stakeholder Communication Team of the Millennium Development Authority (MiDA), as part of its campaign to sensitise the general population on government’s decision to give ECG out on concession to a foreign private entity for about 20 years or more, created the impression that the workers are in support of the action.
Instead, the workers believe the main objectives government seeks to achieve with the sale could be reached without giving the company to a foreign entity under a concession plan.
With energy (power) crisis being the major problem facing the country, they said it would be presumptuous for any individual or group of persons to think that “just by giving ECG out on concession will address the challenges facing the energy sector,” insisting that “until the fundamentals affecting the effective operations of ECG are addressed, no private entity, irrespective of its level of technical and financial capacity, will be able to operate efficiently in the distribution section of the energy sector.”
Government’s decision to sell ECG stems from recommendations of the International Finance Corporation (IFC) of the World Bank to the Millennium Challenge Corporation to the effect that the best option to address challenges in the energy sector of Ghana was to introduce private sector participation in the distribution section of the sector.
Two options were presented: either concession or partial privatisation of ECG, with Government of Ghana (GoG) settling on giving out the company on concession sale in which the State would enter into a contract with a private partner, with the latter having the exclusive right to operate, maintain and carry out investments in ECG for a given number of years—normally above 20 years.
But staff of the already struggling ECG are optimistic “the factors militating against the efficient running of ECG as confirmed by the IFC study can be resolved without giving the company to a private entity.”
“Workers find it unacceptable for GoG to refuse to pay the debts owed ECG but ready to pay to the foreign private investor,” the statement said.
Aside that, they noted that “the current tariff structure does not cover all the variables that impact on the cost of the electricity purchased by ECG” and that “the company purchases power at a higher rate but is compelled to sell to customers at a lower rate, contrary to basic business principles.”
They also argued that “the data that the IFC used in its assessment of ECG in 2012, which was the basis for recommending the private sector participation, is obsolete” and that “a lot have changed in the company since 2012, which unfortunately the IFC have not considered.”
They added: “Wherever the private sector has been allowed to operate in the distribution section of the energy sector, the resultant effect has been abnormal increases in tariffs” while “the net effect of giving out national assets to the foreign private entity on such arrangements like management contract or concession is repatriation of profits from the country, which negatively affects the strength of the local currency.”
In a country where unemployment is a major concern, they said, “government should consider decisions that can affect job security of staff because there is no doubt that the private investor who is interested more in profits will lay off many of the existing staff of ECG, with its attendant social difficulties for a number of families.”
“In addition, ECG is obliged to pay the IPPs in US dollars whilst tariffs are set in Ghana cedi and bills are paid in local currency”, a situation they said occasions a huge exchange loss whenever the cedi depreciates against the US dollar, which increases the losses of the company.
They also complained of governmental and political interference in the running of the ECG, noting that “the frequent changing of Managing Directors has affected the company adversely.”
“The political interference is also seen in the area of procurement and service delivery. Political appointees dictate the types and sources of certain major procurements, which impacts negatively on the operations of the company. A key example is the procurement of metres. Sub-standard metres are forced on the company and have to be changed within a short period of time, adding to the losses of the company,” they noted with concern.
Apart from that, the workers expressed worry that “the Self-Help Electrification Project (SHEP) is implemented directly from the Ministry of Power, “with contracts awarded to political ‘foot soldiers’ without requisite expertise, leading to shoddy works which affect the durability and stability of ECG network.”
“In addition, SHEP metres, which are supposed to be for rural areas, are found installed in urban areas, denying the company revenue that is supposed to come from the metres installed in urban areas,” they further noted.
Workers of the beleaguered power distribution company are therefore against government’s decision to give the ECG to a foreign entity on concession since, in their opinion, “the company is a viable national asset that can easily be transformed to make it more profitable.”
They insist “government should give the same conditions it has guaranteed for the private investor to ECG and the company will be transformed to make it the ‘credible off taker’ of power.”