In West Africa, the Electricity Company of Ghana (ECG) is up for concession due to a lack of funds to keep the public utility operating efficiently, the head of a Ghanian development agency said this week.
Millennium Development Authority (MiDA) CEO Owura Sarfo said that by the end of this week, transaction advisor International Finance Corporation (IFC) will present before MiDA and the Ghanaian government the document that defines the details of how the concession should be structured, Ghana web reports.
Any company that succeeds in securing the concession to operate ECG from January 2017 will be expected to invest about $200 million every year.
Electricity Company of Ghana needs $12 billion
Recent reports revealed that Ghana’s power sector will require about $200 million of investment for next few years in order to stabilise the sector.
The money will be used to replace obsolete equipment in order to maintain service quality.
Additionally an estimated amount ranging between $8 billion and $12 billion would be required by the country for new power generating plants over the next 10 years to ensure reliable power, stated the report.
Twenty-six IPP companies bidding
Sarfo said once government approves this document, MiDA will then issue tender documents in March 2016.
He also revealed that 26 companies have already expressed interest in the ECG concession.
Fourteen of the companies are 100% foreign owned, 10 are indigenous Ghanaian companies while two are joint ventures between local and international companies.
He disclosed that the expression of interest would be brought to an end by the close of this year.
The compact was signed in August 2014, and Sarfo gave the timelines as CIF Disbursement – May 2015; Entry into force (EIF) – March 2016; Tranche 1 disbursement – April 2015; Tranche 2 Disbursement – April 2018; and the compact closure will take place in March 2021.
He explained that MiDA fixing the challenges of ECG was critical because Independent Power Producers (IPP) are looking for a credible off-taker in order to invest in power generation.
According to Sarfo, the fear of no credible off-taker was hampering IPP investments in the power sector as fears of failure to recover investment in current off-taker distribution arrangements abound.