Ghana plans to renegotiate with the US for reinstatement of a $190 million MCC grant to improve the electricity sector and enhance efficiency in distribution.
Ghana is set to renegotiate with the United States Government for the possible reinstatement of $190 million under the Millennium Challenge Corporation (MCC), funds that were previously allocated to the country’s electricity sector. This was revealed by President John Dramani Mahama during a courtesy call on him by Mr. Ousmane Diagana, the World Bank Vice President for West and Central Africa, in Accra.
Mr. Diagana was in Accra to witness President Mahama’s inauguration, which took place on January 7 at Independence Square. During their meeting, President Mahama emphasized the urgent need for reforms in the energy sector to reduce debts and improve efficiency. He recalled that while serving as Vice President under the late President John Evans Atta Mills, he signed the MCC funds agreement, which was aimed at making Ghana the most efficient producer of electricity in Africa and establishing the country as a key hub for electricity exports.
“Unfortunately, democracy has its challenges. When we left office, the new government took over the Millennium Challenge Compact and its final segment, which was intended to enhance efficiency in electricity distribution, billing, and metering,” Mahama said. He referenced the failure of the Power Distribution Services (PDS) deal and stressed the importance of revisiting the privatization of the Electricity Company of Ghana (ECG) to improve distribution efficiency and address challenges in the country’s power supply chain.
President Mahama disclosed that discussions had already begun with U.S. officials and the Millennium Challenge Corporation to reinstate the $190 million previously earmarked for the energy sector. “They indicated that the door is not closed,” he noted, adding that if the funds could not be reinstated, Ghana would seek support from the World Bank to complete the necessary reforms, including reducing losses associated with Independent Power Producers (IPPs).
In the meantime, the government plans to enhance transparency and restore the cash waterfall mechanism to stabilize the sector while it works on comprehensive reforms.
Mr. Ousmane Diagana reiterated the World Bank’s commitment to supporting Ghana’s broader socioeconomic development agenda, emphasizing that they would continue to provide assistance where needed.
