Preparations for the second compact of the Millennium Challenge Corporation (MCC) on Tuesday July 23, 2013, took a giant leap with the signing of an agreement between the Government of Ghana and the MCC concerning the processes involved in making sure the project begins next year.
The MCC is working with the Government to define potential projects for the second compact, which will seek to address Ghana’s inadequate power supply. The Corporation is also collaborating with other U.S. Government agencies in the energy sector through the Partnership for Growth initiative, which is intended to create the next generation of emerging markets through better coordination of objectives and resources.
The Minister for Energy and Petroleum, Mr. Emmanuel Armah-Kofi Buah, who signed on behalf of the government, said the agreement includes milestones that the country wish to reach during the next six to 12 months to herald the beginning of projects under the compact.
Jonathan O. Bloom, Acting Vice President – Department of Compact Operations of the Millennium Challenge Corporation signed for the MCC.
In a brief remark ahead of signing the agreement, the Minister said, the areas of interest to the government and the MCC included restructuring the Electricity Company of Ghana (ECG), the Gas sector and Tariffs issues.
According to him, the MCC’s requirement for the ECG to commit to an aggressive loss reduction campaign has significantly been met with the reduction of aggregate losses from 43 per cent in 2010 to 37 per cent as of the end of June 2013.
Mr. Buah said, the ECG would continue its current loss reduction programme with a goal of further reducing aggregate losses to 34 per cent by June next year with progress continuing thereafter.
He said, the Ministry of Finance has also cleared GH¢207.5 million of arrears to ECG as of June 2013, adding that the ECG has installed prepayment meters in 2,100 out of 2,500 Ministries, Departments and Agencies with the Ministry of Finance budget instruction, including a provision mandating MDAs to pay their own utility bills.
The Minster said, the government and the MCC have agreed to consider a company-wide approach for the potential ECG distribution project rather than restricting it to a specific region with the Ministry of Energy encouraging a study of a full range of private sector participation options for ECG and NEDCo.
On the gas sector, the Minister said gas allocation and pricing policy has been officially approved by Cabinet and the procurement process for the Gas Sector Master Plan has been initiated.
Touching on supply, he said the Ghana National Gas Company was currently in negotiations with the Jubilee partners on the Gas Supply Agreement, adding that the off-shore gas infrastructure and processing plant is scheduled to be completed by the end of December 2013.
“The government of Ghana has made a decision to diversify the source of gas supply by commencing the implementation of a national liquefied natural gas (LNG) import strategy”, he stated.
On tariffs, Mr. Buah said, all utilities have filed tariff adjustment application to the Public Utilities Regulatory Commission (PURC) which is currently engaged in stakeholder consultations.
Mr. Bloom, for his part, explained that the corporation, before finally approving the release of funds for projects identified, ensures that there are some institutional reforms at the sector level, to guarantee that the investments that are going to be made by MCC will stay for a long time.
Present at the signing ceremony were the Vice-President, Mr. Kwesi Bekoe Amissah-Arthur, Chairman of the National Development Planning Commission (NDPC), Mr. P. V. Obeng, Chief Executives of energy sector agencies, the US Ambassador to Ghana, H. E. Gene A. Cretz and other officials from the MCC.