The Millennium Development Authority (MiDA), has downplayed assertions by the Public Utilities Workers Union (PUWU) that the Millennium Challenge Corporation (MCC) compact will impact negatively on the Electricity Company of Ghana (ECG) and result in lay-offs.
PUWU went on strike for three days last week in protest against the compact, calling on government to review the compact which seeks to cede ECG to private investors for a period of 25 years.
PUWU also urged government to rescind its decision to sign onto the compact which could also lead to lay-offs.
But MiDA in a statement, responding to PUWU’s reservations for the first time, assured that “the government of Ghana has gone to great extents to ensure that the jobs of all ECG workers are duly protected for a period of 5 years. It is therefore regrettable that PUWU continues to allege that there will be job losses.”
“The reality is that, the concession arrangement will create more jobs in the power sector,” MiDA noted.
It noted further that “the decision of the Government of Ghana to proceed with a long-term concession arrangement for ECG, was taken only after extensive consultations with a broad range of stakeholders, in-depth study, detailed technical reviews and thorough analysis.”
MiDA also explained that, one of the bidding criteria for the compact was a requirement for investment and “it is in response to this need that $350 million out of the $498.2 million for the compact programme has been allocated to ECG projects.”
Compact won’t lead to increased tariffs
MiDA has also debunked claims that the compact will lead to a hike in electricity tariffs, as the statement held that, it is “not the case, as alleged by PUWU, that high tariffs will result from the concession agreement. On the contrary, improved performance and reduction in the current losses of ECG should facilitate progressive lowering of tariffs.”
“MiDA wishes to put on record that it has acted with integrity, transparency and good faith in its operations and interactions with all stakeholders,” the statement added.
About the Compact
Ghana and the United States have signed an agreement for the release of the $498,200,000 grant meant to improve power distribution in the country under the second compact of the Millennium Challenge Account.
Under this compact, which will last for five years, Ghana has agreed to give up the management of the Electricity Company of Ghana (ECG), for a private company in the hope of bringing efficiency in ECG’s operations.
This compact is the largest U.S. Government transaction to date, under Power Africa, and is expected to serve as an anchor for increased American engagement in Ghana.
The Ghana Power Compact programme consists of 6 major projects each, with a set of activities aimed at contributing to support the transformation of Ghana’s power sector.
These six projects are ECG Financial and Operational Turnaround (EFOT) Project, Northern Electricity Distribution Company (NEDCo) Financial Turnaround Project, Access Project, Regulatory Strengthening and Capacity Building project, Energy Efficiency and Demand Side Management Project, and the Power Generation and Improvement Project.