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ISODEC Urges Government And MCA To Disclose Details Of ECG Privatisation   
 
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15-Oct-2015  
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The Integrated Social Development Centre (ISODEC) has charged the Government of Ghana and its U.S. counterpart, the Millennium Challenge Corporation (MCC) to disclose without further delay, the full details of the planned privatization of the Electricity Company of Ghana (ECG).

The non-disclosure of the details as agreed between the two entities, in the view of ISODEC has not been helpful in ensuring that public debate on the subject responds adequately to the provisions in the agreement and how they address obvious challenges in the energy sector.

“Even though we do not have all the information, it seems to us that the touting of the privatization of ECG as a major part of the solution to the crisis in the energy sector is fraudulent
and deliberately calculated to secure the buy-in of Ghanaians who feel frustrated by the inconvenience posed by the current load-shedding programme” says Campaigns Coordinator of ISODEC, Dr Steve Manteaw; adding that, the privatization agenda will only advance the private commercial interest of foreign multi-national businesses and plunge millions of Ghanaians into darkness on account of unaffordable electricity tariffs.

According to ISODEC, the fact that the U.S. Millennium Challenge Corporation, under whose instigation the privatization programme is being executed appears to be condoning the nondisclosure
of the details of the privatization of ECG, points to the double standards the U.S.

Government exhibits in dealing with Africa. In the U.S. the disclosure of details of such a major decision wouldn’t have been a big issue. After all, such disclosure is in consonance with the
dictates of democratic governance, the foundation on which the American state was established.

Fraudulent Cover-up

The first problem ISODEC has with the decision to put ECG under a concession arrangement has to do with the official denial that, this is PRIVATISATION. The World Bank and other reputable multi-lateral development agencies have defined privatization to include the transfer of the entire or part of the state’s interest in a state-owned enterprise to a private investor.

It includes outright sale, lease, concession, Build Operate and Transfer (BOT), Public-Private Partnership (PPP), Management Contract, and other forms which introduce private interest in the provisioning of public services. It is therefore dishonest on the part of government and its partners to argue that leasing the assets of ECG for 30 years does not amount to privatization.

It is dangerous to lease out strategic assets

The second problem we have with the arrangement is that, because electricity drives the national economy, it becomes a strategic asset. It is our view that we will be embarking on a reckless
adventure if we put such a strategic asset in the hands of a private company. What happens if the government gets into a dispute with the private firm, and the firm decides to turn-off the light on the entire country? While that may sound far-fetched, the extent to which private companies can go to demand their pound of flesh is common knowledge.

Realistic tariffs, only when we pay realistic wages

The impression is wrongly given that the private company is going to bring in new technology to introduce efficiency into the operations of ECG, and that will lead to lower tariffs. The fact however is that, private companies are only motivated by profits. The more they can get out of us, the better. That is why they keep talking about realistic tariffs. ECG under Ghanaian management has also asked for realistic tariffs but we have refused them.

Why will we grant the foreign firm that which we have denied our own? Our information is that tariffs are supposed to increase to over 200 percent to make it attractive to the concessioner before privatising ECG. If indeed foreign multi-national companies are more efficient, why won’t they come in at the existing tariffs and work under the same conditions that we as citizens have forced ECG into. We can only justify the demand for realistic tariffs, only when the economy begins to support
realistic wages.

Why PURC will rubber stamp ECG’s Request for increases
Ghanaians should not be surprised that the Public Utilities Regulatory Commission (OURC) will grant the tariff adjustment being requested by ECG. It is all part of the grand design to get ECG
to do the dirty work of taking tariffs to the so called attractive level before the bidding and handing over of ECG to the “scavengers”.

Job Losses
While the government and its partners claim there will not be any job losses as a result of the privatization, they are not the ones to decide the right size of workforce to use after the handover.
The assurance they are giving can be taken serious only when they are made part of the contractual obligations of the concessioner.

Privatising ECG Won’t Fix Dumsor

Our deepest concern has to do with the fact that ECG’s privatization won’t fix dumsor. It is indeed a wrong solution to the problems that confront the energy sector. In its 2013 report entitled: “Energising Economic Growth in Ghana: Making the power and petroleum sectors rise
to the challenge”, the World Bank cautioned that “at a time when the Ghanaian economy is achieving sustained growth in excess of six per cent annually, with ambitions to raise this further, there is a risk that misguided and inappropriate policies would lead to the power sector becoming a drag on the economy.”

In its diagnosis of the problems confronting the energy sector, the World Bank was of the view that the energy sector faced two challenges arising from forces external to the sector.

The challenges, the Bank said, were lack of adequate and secure quantities of reasonably priced fuel for power generation, and the lack of adequate public funds to finance the sector’s investment requirements.

It means therefore that the US500 Million the MCA is providing to fix problems at ECG won’t suffice the investment needs of the energy sector. They claim it will prepare the way for further investments but at the end of the day, the foreign firm contracted to take-over the assets of ECG will be taking home more than it will invest in the company.

Let’s be guided by history

It is important that, we are guided by history as we proceed along the path of reforming our energy sector. No privatization has ever successfully delivered the desired results in Ghana. We tried management contract in the water sector and failed miserably. We tried it with Ghana Airways, and again it failed. Ghana Telecom which is sometimes cited as an example of a successful privatisation is struggling to break even if we care to know. But for the strong
financial standing of Vodafone UK, it would have dropped out of competition.

The assertion that the private sector is more efficient is nothing but a myth. The private sector thrives on deceit and manipulation of the market. That is exactly what almost brought the entire American economy on its knees, and warranted the Wall Street Reforms Act.

ISODEC calls on all Ghanaians to help stop this fraud about to be perpetrated against Ghanaians by joining the ECG Anti-privatisation Campaign now.

Take ACTION Now?

1. Sign the petition in this link http://www.ipetitions.com/petition/petition-against-sale-ofelectricity-company-of

2. Share the *#stopECGsale* hashtag on social media.

3. Speak with your representatives in Parliament about the negative impacts of privatizing

Thank you
Signed
Dr. Steve Manteaw
(Coordinator, Media & Campaigns)
 
 
 
 

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