ASEC proposes key recommendations for 7-member committee on ECG privatisation

 The Africa Sustainable Energy Center commends the new government for setting up a committee to oversee the privatization of the commercial aspect of the Electricity Company of Ghana (ECG).

However, recent comments and suggestions seem to recommend just the need for private sector participation in ECG revenue mobilisation. The truth is that Ghana does not just need the participation of the private sector for revenue mobilisation.

The current state of the ECG requires more than assistance in collecting money owed by customers. We need private sector capital and expertise in critical terms to recoup all revenues and achieve operational excellence before transitioning the ECG. This commercial sector privatisation is stringent because of the following areas:

1. Private sector capital and expertise are needed in the installation of smart meters to ensure accurate and real-time billing, reducing revenue losses due to faulty, inaccurate, or bypassed meters. Also, this is needed to upgrade customer management systems, including advanced billing software and mobile payment platforms, to enhance convenience and reduce revenue leakages.

2. Customer service improvement, where private sector efficiency can enhance consumer satisfaction and payment compliance.

3. Leveraging efficient private sector debt recovery mechanisms for the collection of areas owed by customers and robust and innovative anti-theft technologies to reduce commercial losses.

4. Infrastructure modernisation, such as upgrading distribution networks to reduce technical losses.

These interventions will ensure that all revenues due to ECG are accurately captured and collected. Importantly, the private sector can unlock operational efficiencies, allowing ECG to operate more like a commercially viable entity while ensuring a sustained electricity supply.

Therefore, the Africa Sustainable Energy Center proposes the following key considerations that the 7-member committee needs, to help achieve operational goals for the Electricity Company of Ghana

A Well-Estimated Concession Period

To maximize the benefits of private sector involvement, it is crucial to design a structured concession period. This period must balance the interests of both the private investor and the state, ensuring that Ghana regains full control of ECG once the sector becomes financially stable and operationally efficient. ASEC suggests the committee should take into account the following variables in designing a well-estimated concession period.

a. Capital Recovery Timeline

The time required for private investors to get back their investments in smart metering infrastructure, IT systems, and network upgrades. The period needed to achieve operational efficiency gains and targeted reductions in technical and commercial losses in the sector is crucial. The committee should save the nation by conducting a thorough analysis.

b. Revenue Improvement Milestone:

The committee should put down key benchmarks for improved revenue collection rates, arrears recovery, and customer payment compliance.

c. Debt Recovery Projections:

The committee must give a realistic timeframe for collecting legacy debts owed to ECG.

d. Tariff Adjustments and Affordability:

Time for gradual tariff reforms to reflect cost recovery while maintaining affordability for vulnerable consumers must be given.

e. Regulatory and Policy Adjustments:

Duration required to implement necessary legal and policy frameworks to support the concession arrangement needs to be reviewed.

f. Market Stability:

Consideration of macroeconomic factors, including currency fluctuations and inflation, that could affect investment returns.

g. Capacity Building:

Time needed for skills and knowledge transfer to local ECG personnel to ensure smooth takeover post-concession.

h. Consumer Sentiment and Adaptation:

The period for customers to adapt to new billing systems, payment methods, and customer service structures.

ASEC believes that a carefully structured concession period, considering these variables will ensure that the private sector achieves its investment objectives while Ghana secures long-term benefits from a revitalised ECG. If these are carefully looked at, we can transform ECG into a modern utility provider, critical for supporting the country's industrialisation and economic growth agenda.

Clear Regulatory Roadmap and Stakeholder Engagement

To ensure the successful privatization of the commercial aspect, there must be a transparent regulatory framework and robust stakeholder engagement strategy. This will not only attract credible private sector partners but also build public trust and improve revenue mobilization

a. Define the Scope of Privatization

Clearly outline which commercial activities will be privatized. Also be clear on the Reduction in aggregate technical and commercial (ATC) losses

b. Establish Transparent Procurement Processes

Conduct competitive bidding for private sector participation, ensuring fair competition and value for money. Clearly communicate evaluation criteria focusing on technical expertise, financial capability, and proven experience. The public should be involved throughout the process.

c. Empower Public Utilities Regulatory Commission (PURC) to oversee tariff adjustments and protect consumer interests during and after privatisation.Implement adaptive regulatory frameworks that allow for periodic reviews based on market conditions, technology adoption, and performance outcomes.

d. Clearly define the roles of Energy Commission, Ministry of Energy, and ECG’s Board in supervising private participation.

e. Robust Stakeholder Engagement Strategy

Effective stakeholder engagement ensures public buy-in, reduces resistance, and aligns interests across all levels. Also map key stakeholders especially those in villages to continue lifeline tariffs for low-income consumers during the transition.

f. Transparent Communication Strategy

Conduct public awareness campaigns to explain the rationale, benefits, and expected outcomes of privatisation. Also hold regular stakeholder forums to gather input and address concerns, ensuring inclusive participation from all customer classes.

g. Engage Employees and Unions Early

Involve ECG employees and unions from the onset to mitigate resistance. Offer capacity-building programs and clear employment guarantees where possible, highlighting opportunities for skill upgrades in a privatised setup.

h. Customer-Centric Engagement

Ensure consumer protection frameworks are part of the privatisation plan, especially regarding tariff adjustments. Establish customer grievance redress mechanisms to address billing disputes and service issues efficiently. Involve consumer advocacy groups in consultation processes to ensure the consumer voice is represented.

Development of Performance-Based Concession Agreements (PBCAs)

ASEC is proposing to the committee that it needs to design a PBCA that ties financial rewards to measurable performance indicators to the private sector. This will ensure that Ghana achieves improved operational efficiency while maintaining long-term ownership of strategic assets. In this, the committee will outline the following:

a. Review Intervals

Propose appropriate years say every 2 years to assess performance and make necessary adjustments like a fixed management fee linked to non-performance.

b. Extension Clauses Performance-based extensions, rewarding outstanding performance with additional years until the end of the concession.

c. Private Sector Investment Obligations

Minimum capital expenditure and timeline targets for smart meter rollouts, IT systems, and infrastructure upgrades. Performance metrics should be SMART (Specific, Measurable, Achievable, Relevant,

Time-bound) and linked directly to revenue improvement, customer service, and operational efficiency.

d. Cost Recovery Mechanisms:

Design revenue-sharing models based on collections.

e. Access to Financing Concessionaire must demonstrate access to financing for initial investments without state guarantees.

Regionalised Commercial Aspect Privatization

ASEC proposes a decentralized approach that could enhance operational efficiency, promote competition, and address region-specific challenges to address performance-driven accountability at a manageable scale. This is because regional private operators can better manage local risks, such as theft, and cultural barriers to payment that may overwhelm a single private sector. To prevent numerous concessions to pave the way for a beautiful electricity market model, the committee should consider regional clusters (Northern, Southern, and Middle Belt clusters). ASEC's analysis shows that this approach that aligns with international practices will ensure the following

a. Tailored Solutions for Regional Challenges

Each concessionaire would have region-specific KPIs tailored to local challenges. The government can then establish performance league tables to compare regional outcomes, identify best practices, and replicate successful strategies. Poorly performing concessionaires can be replaced without disrupting national operations.

b. Competitive Benchmarking Across Regions

Private operators would compete indirectly, fostering customer service and innovation.

c. Enhanced Risk Management

By distributing operational risks across multiple concessionaires, the impact of underperformance in one region can be contained.

d. Possible incremental and flexible rollout

The committee can pilot privatisation in selected clusters before a full national rollout, refining contractual terms based on early lessons.

e. Stakeholder Engagement at Regional Levels

Tailor stakeholder engagement strategies for each region, involving local chiefs, community leaders, and municipal authorities to address localised challenges.

These recommendations offer Ghana a scalable and flexible approach to privatizing ECG’s commercial operations.