Ghana-US Sign $498m Compact as ECG Management Set to Be Outsourced

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.
President John Mahama and US Secretary of State, John Kerry looked on as Ghana’s Finance Minister Seth Tekper and CEO of the Millennium Challenge Corporation Dana Hyde signed the agreement last Tuesday in Washington D.C.

Director of communications at the presidency Ben Dotse Malor explained the MCA “is going to make a huge difference in the lives of people, in the lives of companies and in the work of many industries….it will be devoted to the largest degree to power energy production. This will greatly result in the reduction of poverty across Ghana”.
Ghanaians have had to endure a two-year erratic supply of power that has brought businesses to its knees. The Ghana Revenue Authority has explained its inability to achieve its tax collection targets was because businesses have suffered due to the energy crisis.
The President has assured, he will end Ghana’s energy crisis and asked Ghanaians to give him sometime.

“This new Compact with the MCC demonstrates the growing cooperation between Ghana and the USA. It will benefit millions of our people and contribute immensely to the achievement of my ‘Energy For All’ objective,”‎ said President John Dramani Mahama.
Under the second compact which will last for five years, Ghana has agreed to give up the management of the Electricity Company of Ghana for a private company in the hope of bringing efficiency in ECG’s operations.
The outsourcing of management of the company allays fears the government-owned power company was up for outright sale.
Ghana is also expected to contribute 15 per cent of its own funds to the project pushing the figure to $535,565,000.

The second compact according to the MCC, is the largest U.S. Government transaction to date under Power Africa and will serve as an anchor for increased American engagement in Ghana.
“MCC’s Ghana Power Compact takes a system-wide approach to transforming Ghana’s energy sector. The compact invests in projects focused on distribution to make the country’s power utility financially viable and capable of attracting private investment while it also funds initiatives supporting greater energy-efficiency and cleaner renewable energy. These investments will provide Ghanaian homes, schools and hospitals with the access to the reliable electricity they need to thrive,” said Dana J. Hyde, MCC’s chief executive officer.
MCC will make an initial investment of up to $308.2 million, including funding to put the Electricity Company of Ghana, the country’s main distribution company, on a sustainable path, help the utility meet current electricity needs and upgrade infrastructure to reduce outages and improve service. A second tranche of up to $190 million in funds will be made available if Ghana accomplishes a set of reform targets set forth in the compact.
The Millennium Challenge Corporation (MCC) , a bilateral United States foreign aid agency signed the first compact with Ghana in August 2006 and gave the country US$547 million. It brought significant infrastructural projects including the now iconic National Highway (N1) in Accra.
MCC signs either a compact or a threshold agreement with a partner country. A compact is awarded if the country scores highly on the selection criteria indicators. If the country scores poorly but has a positive, upward trend on the selection criteria, it can still be eligible for a smaller grant, called a threshold program.