Africa Institute of Energy and Sustainability Opposes ECG Sale, Calls for Concession Model

Africa Institute of Energy and Sustainability Opposes ECG Sale, Calls for Concession Model

The Africa Institute of Energy and Sustainability has voiced strong opposition to the proposed outright sale of the Electricity Company of Ghana (ECG), arguing that privatization through concessions is a more strategic solution to the country’s power sector challenges.

The Institute warns that selling ECG could spark public backlash, reduce government control over critical national infrastructure, and limit long-term policy flexibility. Instead, it advocates for a structured concession model that attracts private investment while ensuring state oversight.

Ghana’s power sector continues to face significant financial and operational inefficiencies. As of 2023, the country had an installed generation capacity of 5,194 megawatts (MW), with a dependable capacity of 4,756 MW. Thermal sources accounted for 68% of generation, while hydro contributed 32%.

One of the sector’s biggest challenges is system losses, which rose from 24% in 2014 to over 32% by 2023. Additionally, tariffs remain below cost-recovery levels, exacerbating financial constraints despite efforts to improve grid expansion and metering systems.

The failed Power Distribution Services (PDS) concession highlighted both the potential benefits and challenges of private-sector involvement. While PDS demonstrated revenue improvement, governance and contractual issues led to its termination.

Ghana’s new Energy Ministry has since revived discussions on privatization, but the Institute argues that an outright sale of ECG would not be in Ghana’s best interest. Instead, it recommends a concession-based model, citing successful implementations in Côte d’Ivoire and Senegal.

The Africa Institute of Energy and Sustainability outlines the following advantages of adopting a concession approach:

Improved Efficiency: Concession models have helped countries like Côte d’Ivoire and Senegal reduce system losses and enhance revenue collection.

Attracting Private Investment: Private capital can be leveraged to upgrade infrastructure and modernize metering systems without burdening the national budget.

Maintaining National Control: The government retains ownership of ECG’s core infrastructure while benefiting from private-sector efficiency.

Enhanced Accountability: Concession agreements can set strict performance benchmarks, ensuring improved service delivery.

Global Best Practices: Studies show that concession-based models increase electricity access rates more effectively than full privatization or state monopolies.

To ensure a financially sustainable and efficient power sector, the Institute proposes unbundling ECG’s distribution and retail functions, thus ECG should focus on distribution while retail operations are liberalized through competitive concession agreements.

Secondly, the Institute noted that by adopting transparent concession models, operators should be selected via competitive bidding with strict performance indicators.

Strengthening regulatory oversight. Hence Energy Commission and the Public Utilities Regulatory Commission (PURC) should be empowered to enforce compliance.

Another point is by merging ECG and NEDCo. A unified national distribution company could enhance operational efficiency.

Dr. Samiu Kwadwo Nuamah, Executive Director of the Africa Institute of Energy and Sustainability, emphasized that privatization through concessions, rather than an outright sale offers a more balanced and sustainable path forward.

“This model ensures that the government retains control over strategic assets while leveraging private-sector expertise and investment,” he stated.

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