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Workers maintain the thermal power station at Takoradi, Ghana. © Jonathan Ernst / World Bank
National electricity coverage has moved from just 15% in 1990 to 76% in 2013. But, the country has been overwhelmed by regular blackouts that are hitting families and industry hard.
In 2011, the Millennium Challenge Corporation (MCC) conducted a study of Ghana’s power sector and found the nation loses roughly 5% of GDP annually as a result of inadequate and unreliable power supply, which is largely due to poor sector management, insufficient power generation, and an inefficient distribution system.
In 2012, customers suffered an average of 106 power interruptions against an international benchmark of 10 per year.
To help overcome these problems, the Government of Ghana signed the Ghana Power Compact with the MCC in August 2014, which will provide nearly USD500 million to help overhaul the country’s energy sector.
As part of the MCC’s financial support for the Ghana Power Compact, IFC signed an agreement with the Ministry of Power on June 8, 2015 to help turn around the performance of the Electricity Company of Ghana (ECG) – Ghana’s main distribution utility – through a public-private partnership.
“Ghana has implemented several policies and programs since independence aimed at achieving socio-economic transformation of the country and has already achieved the second highest rate of access to electricity in Sub-Saharan Africa,” said Ronke-Amoni Ogunsulire, IFC Country Manager in Ghana. “But the Ministry of Power has identified a number of challenges in the sector that are holding back the country’s development and IFC is committed to supporting the Minister in his efforts to transform the governance and performance of the sector.”
ECG currently operates with high technical and commercial losses in the order of 35%. As a result, the state-owned company has been unable to recover costs, invest in the necessary maintenance and expansion of Ghana’s distribution system, or even sometimes pay the country’s power generators for the power it receives. This has had significant consequences across the entire energy system.
In May 2015, the Government of Ghana decided to seek a partnership with a qualified private sector company to operate ECG through a long-term concession agreement, and to maintain and expand Ghana’s energy distribution system.
“Fixing the problems in distribution will help eliminate constraints in other parts of the energy system,” said Ogunsulire. “It is an important and difficult challenge for the economic growth of the country and the Government of Ghana has shown it is dedicated to meeting this challenge. IFC looks forward to working with the government to meet its development goals.”