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13 June 2016

ECG deal: Shift from state to private monopoly dangerous – MP

MP for Bosumtwe, Simon Osei Mensah

MP for Bosumtwe, Simon Osei Mensah

A Member of Parliament for Bosumtwe, Simon Osei Mensah says government’s decision to privatize the operations of the Electricity Corporation of Ghana could be risky to consumers.

The New Patriotic Party MP says unlike the telecoms sector which had competitors in the industry from which consumers can make their choices, the electricity distribution subsector has only one operator- ECG- and any attempt to privatize the operations of the company could have dire consequences to consumers

Speaking on Joy FM’s Newsfile program Saturday the MP says government’s decision to shop for concessionaires to take over the operations of ECG is no different from privatizing ECG.

“Why are we discussing privatization? Concessionaire is a form of privatization,” he stated but also clarified that the views were his personal opinions and did not represent that of the party.

He argued the decision to privatize ECG was nothing more than a haste by government to satisfy the conditionality imposed by the US in order to benefit from the Millennium Challenge Account Compact II which worth over $400 million.

Under that compact, government was expected to do two things- increase electricity tariffs to make the sector attractive to investors and to appoint a concessionaire to manage the operations of ECG.

Osei Mensah said government had already implemented the first part of the conditionality which is to increase tariffs by imposing more taxes and has now begun moves to appoint a concessionaire for ECG in fulfillment of the second compact.

Quoting government’s own statement, the MP said the funds from the second Compact were to be used to shore up the cedi and to prevent it from depreciating like it did in the last quarter of 2015 and in the first quarter of 2016.

President John Mahama in discussing the issue of the privatization of ECG cited the liberalization of the telecoms sector. The Deputy Communication

s Minister Felix Kwakye Ofosu in discussing the same matter on Newsfile also mentioned the sale of Ghana Telecoms by the Kufuor administration.

But the NPP MP said the conditions surrounding the privatization of ECG are fundamentally different from the telecoms sector and the sale of Ghana Telecom.

Unlike Ghana Telecom which had other competitors like Spacefon, now MTN, Tigo etc at the time of sale, Mr Osei Mensah said ECG has no competitor which means any investor who takes over would enjoy an absolute monopoly and that in itself is dangerous to consumers because they would have no other choice of service to switch to in the event services by the concessionaire are bad.

“The first risk I see is moving from state monopoly to private monopoly for 25 or 30 years and it is very dangerous.

“We are changing state monopoly indirectly to a private monopoly in the distribution of power,” he said.

He said the concessionaire will take over the operations of the ECG assets with no competitor but with an insatiable desire to make profits from their operations.

“So whether they operate efficiently or not they will have to recover their money, pay their employees economic wages as they are talking about and tariffs will have to go up. That is the risk the country stands to face,” he stated.

He regretted the absence of the draft agreement to interrogate the issue properly.

But the Deputy Minister of Communications in a rebuttal said government was privatising ECG because of the poor service delivery and the inefficiencies in operations by ECG.

He said if it was only about the money, government could easily have gone for the cocoa syndicated loan which was worth over GHC2 billion.

He further argued that if anything, it was only a coincidence that the Compact agreement talked about concessionaires for ECG at a time the government had made its mind to improve operations at ECG by privatizing aspects of its operations.

Despite admitting the government was indebted to ECG, the Deputy Minister said the ECG is also indebted to government having failed in the past to pay up cost of investment into the company’s operation.

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