ASEC proposes comprehensive strategy for ECG privatisation

The Africa Sustainable Energy Centre (ASEC) has applauded government for establishing a seven-member committee to oversee the privatisation of the commercial aspect of the Electricity Company of Ghana (ECG).

However, ASEC cautions that the current debate has focused solely on private sector participation in revenue mobilisation, neglecting the broader challenges facing the state-run power distributor. As a result, it has put forward key recommendations to address these issues.

The think tank asserts that “the current state of the ECG requires more than assistance in collecting money owed by customers. “We need private sector capital and expertise in critical terms to recoup all revenues and achieve operational excellence before transitioning the ECG,” ASEC’s Director of Research and Innovation, Dr. Elvis Twumasi, stated.

ASEC’s recommendations span several critical areas, such as the importance of deploying private sector capital and technical expertise in key operational upgrades. This includes the installation of smart metres for accurate and real-time billing, the upgrading of customer management systems with advanced billing software and mobile payment platforms, and the implementation of robust debt recovery mechanisms coupled with innovative anti-theft technologies.

Additionally, ASEC highlights the necessity of modernising ECG’s infrastructure, such as upgrading distribution networks to reduce technical losses. These measures, ASEC argues, are essential for ensuring that all revenues due ECG are accurately captured and collected, ultimately enabling the company to function more like a commercially viable entity while delivering reliable electricity.

According to ASEC’s Director of Research and Innovation, Dr. Elvis Twumasi, “The private sector can unlock operational efficiencies, allowing ECG to operate more like a commercially viable entity while ensuring a sustained electricity supply”.

A well-estimated concession period

The think tank believes the design of a carefully structured concession period, considering variables such as capital recovery timelines, revenue improvement milestones and debt recovery projections, will ensure that the private sector achieves its investment objectives while Ghana secures long-term benefits from a revitalised ECG.

The committee is advised to “save the nation by conducting a thorough analysis” that covers variables including revenue improvement milestones, debt recovery projections, tariff adjustment and affordability.

Other critical areas are regulatory and policy adjustments, market stability, capacity building and consumer sentiment and adaptation.

Clear regulatory roadmap and stakeholder engagement

Dr. Twumasi also recommends that the committee clearly define the scope of privatisation, establish transparent procurement processes, and empower the Public Utilities Regulatory Commission (PURC) to oversee tariff adjustments and protect consumer interests.

“To ensure the successful privatisation of the commercial aspect, there must be a transparent regulatory framework and robust stakeholder engagement strategy. This will not only attract credible private sector partners but also build public trust and improve revenue mobilisation,” ASEC noted.

In addition, clearly defined roles for the Energy Commission, the Ministry of Energy and ECG’s Board are crucial, he said. “Effective stakeholder engagement – involving public awareness campaigns, early employee and union engagement, and customer-centric measures – is essential to foster public trust and improve revenue mobilisation.”

Development of performance-based concession agreements (PBCAs)

ASEC proposes that the committee design a PBCA that ties financial rewards to measurable performance indicators to the private sector. This, they believe, will ensure that Ghana achieves improved operational efficiency while maintaining long-term ownership of strategic assets.

Doing this will also drive efficiency, accountability and innovation, ensuring that service providers meet clearly defined targets. By aligning financial incentives with performance, ASEC said the country can enhance operational efficiency while safeguarding long-term ownership of its strategic assets.

As part of this proposal, the committee is expected to outline key elements of the PBCA, including performance metrics, monitoring mechanisms, and accountability structures. These guidelines will establish a transparent and results-driven system, fostering a partnership between the public and private sectors that prioritises sustainable growth and national interests.

Regionalised commercial aspect privatisation

ASEC further advocated a regionalised approach to the privatisation of ECG’s commercial operations. In its view,  forming regional clusters (Northern, Southern and Middle Belt), the committee can tailor solutions to local challenges, promote competitive benchmarking, enhance risk management and pilot incremental roll-outs.

“This is because regional private operators can better manage local risks – such as theft and cultural barriers to payment that may overwhelm a single private sector – to prevent numerous concessions n order to pave the way for a beautiful electricity market model,” the think tank explained.

ASEC’s analysis shows that this approach that aligns with international practices will ensure the tailored solutions for regional challenges, competitive benchmarking across regions, enhanced risk management, possible incremental and flexible roll-out as well as stakeholder engagement at regional levels.

The recommendations from the ASEC offer a scalable, flexible strategy for transforming ECG into a modern utility provider that supports the nation’s industrialisation and economic growth agenda.

The think tank concluded by urging the committee to conduct thorough analyses and incorporate these critical variables into its strategic framework.

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