President Mahama meets independent power producers to discuss energy sector challenges; promises reforms at ECG

President John Dramani Mahama has met with Independent Power Producers (IPPs) to address longstanding challenges in Ghana’s energy sector, particularly the financial sustainability of the Electricity Company of Ghana (ECG) and the overall power distribution framework.

The meeting, held at the President’s office, marked the beginning of what the President described as a new chapter in Ghana’s energy governance.

In his opening remarks, President Mahama underscored the critical need for reforms in the energy sector, highlighting issues of inefficiency, procurement irregularities, and revenue losses at the ECG.

He also revisited past efforts to introduce private sector participation in the distribution and billing of electricity, referencing the controversial Power Distribution Services (PDS) deal that was terminated under the previous administration.

“If you made 40% commercial and technical losses and continue to think that you have a viable business,” Mahama said, “something must give in that sector.”

The President emphasised the importance of private sector involvement in reducing the ECG’s losses and improving revenue collection, suggesting that a well-structured and transparent partnership could yield better results than previous attempts.

Revisiting the PDS saga

President Mahama provided context on Ghana’s previous attempt to introduce private sector participation in electricity distribution through the PDS deal.

He noted that while the PDS arrangement was flawed, it demonstrated the potential for increased revenue collection when private operators are involved.

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“Even as irregular as PDS was and as inefficient as it was, you could see an increase in the revenue that was being collected,” he said. “If we do it more transparently, more fairly, more competitively, I’m sure that we’ll get an efficient partner to join us in terms of billing and metering.”

The President highlighted the need for a fresh approach to private sector involvement, stressing the importance of transparency and competitiveness in selecting partners for future projects.

Governance reforms at ECG

A significant focus of the meeting was on improving governance at ECG. President Mahama criticised the current procurement practices at the company, questioning why the ECG would procure items that would not be needed for several years.

“We can start to look at their procurement systems,” he said. “Why would you procure items that you don’t need until five years or six years after? So much of the revenue that is collected must go to pay for power that is generated.”

He also called for the more effective implementation of the cash waterfall mechanism to ensure that IPPs are remunerated for their services promptly.

“How to make the cash waterfall mechanism more effective so that at least you people are getting one bad part of your cost while we look at the outstanding debt. These are issues that we want to look at. But we’re going to do that in concert with you,” he added.

A new chapter in energy governance

President Mahama assured the IPPs that his administration is committed to turning a new page in energy governance, recognising the vital role they play in Ghana’s power sector.

“As I said in my inaugural address, Ghana is open for business again,” he remarked. “You guys brought your investment in here, and you expected that investment to pay off. We need to be faithful partners so that you’re able to run your businesses properly and account to your shareholders.”

He acknowledged the frustrations of the IPPs, who have faced delays in payments and challenges in recovering their investments. The President pledged to work collaboratively with them to address these issues and ensure a sustainable energy sector.

The President’s engagement with the IPPs signals his administration’s intent to address the deep-rooted challenges in Ghana’s energy sector.

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