President John Dramani Mahama is pursuing the reinstatement of a $190 million Millennium Challenge Corporation (MCC) grant to address inefficiencies in Ghana’s electricity distribution sector.
During a meeting in Accra on Wednesday with Ousmane Diagana, the World Bank’s Regional Vice President for Western and Central Africa, President Mahama identified the energy sector as a critical barrier to Ghana’s economic stability.
Renewed Engagement with MCC
The grant, initially part of the $316 million Ghana Power Compact signed in 2014, was lost after the cancellation of the Power Distribution Services (PDS) concession agreement in 2019.
President Mahama revealed that discussions with the MCC during a recent US visit indicated a possibility of reopening negotiations.
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“We asked if it was possible for them to reinstate the $190 million they had devoted to the energy sector, and they said the door is not closed,” the President said.
“We need to pursue that discussion to revitalise reforms in our energy sector.”
Prioritising ECG Reforms
At the core of President Mahama’s plan is the restructuring of the Electricity Company of Ghana (ECG).
He underscored the importance of fixing ECG to stabilise the entire power value chain and reduce inefficiencies.
“We cannot continue to ignore the problems within ECG,” he noted.
“Privatising the distribution aspect to introduce private sector efficiency is an option we must revisit.”
World Bank Collaboration
In addition to the MCC grant, Ghana is turning to the World Bank for technical support to address inefficiencies, particularly in reducing losses tied to Independent Power Producers (IPPs).
President Mahama stressed the need for immediate reforms, including reinstating the cash waterfall mechanism to ensure transparency in the sector.
Mr. Diagana assured Ghana of the World Bank’s commitment to supporting long-term solutions.
“The energy sector has been a long-standing concern for the World Bank, and it needs fixing,” he stated.
Revisiting the Ghana Power Compact
Signed in 2014, the Ghana Power Compact aimed to transform the energy sector by investing in infrastructure, enhancing efficiency, and promoting equitable access.
The cancellation of the PDS concession disrupted these objectives, leaving Ghana to face persistent operational inefficiencies and financial strain.
President Mahama’s renewed push for the MCC grant and collaboration with the World Bank marks a significant step in addressing these challenges.
If successful, these efforts could stabilise Ghana’s energy sector, fostering economic growth and improving service delivery for citizens.
This proactive approach underscores the government’s recognition that resolving energy sector issues is essential for national development and investor confidence.
