Private sector participation in energy distribution crucial under IMF programme

The participation of the private sector in Ghana's energy distribution is critical to the reforms outlined in the International Monetary Fund's (IMF) ongoing US$3 billion loan-support programme.The development, which is part of the government's efforts to improve energy efficiency and reduce debt, is outlined in the document guiding the implementation of the country's three-year Extended Credit Facility (ECF).Over the last month, there have been intermittent power outages, prompting calls for the government to involve the private sector in resolving the issues to ensure that Ghanaians get reliable and affordable electricity.The Ghana News Agency went over the proposal for the IMF loan-support programme and found that the government planned to enter a concession arrangement in the energy distribution sector.There are no timelines for the move, but pages 15 and 67 of the programme documents note the government's plan to develop a strategy with specific goals for reducing distribution losses and improvin g revenues.'[It] will entail estimating investment requirements for upgrading equipment and systems, finalising the modalities of private sector participation in the distribution sector,' the programme document indicated.A comparable initiative in recent times has been the agreement with Power Distribution Services (PDS), which was terminated in 2019 due to PDS's failure to achieve certain pre-conditions.This led to the country missing some US$190 million in investment under the second tranche of the Millennium Challenge Corporation (MCC) power compact for the long-term sustainability of related infrastructure and financial recovery in the energy sector.At the time, the government stated that it was committed to private sector participation in the operations of the Electricity Company of Ghana (ECG) in keeping with due process and fidelity.Ms Alice Albright, Chief Executive Officer, MMC, stated on Thursday, May 9, 2024, that while they are open to working in Ghana again, there are no immediate plans to do so.Nana Amoasi VII, Executive Director, Institute for Energy Security (IES), has endorsed private sector participation through a concession agreement in the energy distribution sector.Speaking with the Ghana News Agency about the situation, he explained that since the intermittent power outages started, there had been no observable improvement in power generation.That, he stated, could prolong the situation unless the government ensures an adequate and consistent supply of fuel to power-producing facilities, necessitating private sector participation.'This approach can bring in expertise, investment, and efficiency improvements that are often needed to address infrastructure challenges and improve service delivery in the power sector,' he said.He said lessons from the PDS deal meant that the government must ensure that 'the concession agreement is well-designed, transparent, and aligned with best practices to avoid the pitfalls experienced in the past deal.'Source: Ghana News Agency