Wednesday, 15 April 2015

Why Dismember The Electricity Company Of Ghana's Distribution Network?

Recently, President Mahama opened a new electricity sub-station, belonging to a privately-owned Ghanaian company, Enclave Power Company - which supplies power to the free-zone enclave.

In our present predicament, any new power-sector investment - be it from a public-sector or private-sector source - is to be welcomed.

Presumably, the Electricty Company of Ghana (ECG), must have previously been the supplier of electricity to the free-zone enclave. The question is: why did it lose out to a newcomer?

Perhaps the ECG did not have the required funds to enable it put up a modern sub-station of its own to serve the area, when it supplied the free-zone enclave with electricity - which might have informed the decision to let a private-sector company take over the supply of electricity to the free-zone enclave.

But what is wrong with giving companies in the enclave the opportunity to choose their preferred electricity supplier,  I ask? Why not allow the ECG and the Enclave Power Company to compete for customers?

And should that selfsame competition yardstick not be applied to any other company that might want to enter the power industry's  distribution sector?

Elsewhere, such as the UK, as a matter of principle, regulators always insist on competition not being negatively impacted,  when new companies enter markets - but in Ghana the geniuses who rule us rather choose to replace government monopolies with private monopolies, which then go on to manipulate their markets: and engage in egregious profiteering.

What is the point of a belief in the efficacy of market forces, and the benefits of private-sector led growth, if we molly-coddle investors - and allow them to operate in protected markets here?

How does that ultimately benefit consumers and the national economy? What electricity consumers in Ghana actually need is the opportunity to select their preferred electricity suppliers.

With respect, if the most profitable parts of the ECG's distribution network are going to be hived off for private entities to operate, then what is the point of government officials insisting that the ECG will remain 100% government-owned?

Why do our leaders never consider floating part of the government's shares in the companies it owns on the Ghana Stock Exchange (GSE) - to raise interest-free capital for those companies: in an economy hobbled by high interest rates?

Surely, the government could part-fund the modernisation of the ECG's infrastructure, by selling some of its shares in the company, on the GSE?

The success of the Ghana Oil Company Limited (GOIL), part of whose shares the government sold on the GSE years ago, ought to be an example to the government, in the case of the ECG.

The GOIL privatisation model, is one that makes perfect sense, for the cash-strapped government of a highly-indebted nation like ours.

If that option exists, why dismember the ECG's distribution network - and let private operators take over its most profitable parts?

Alas, 100% state-ownership of an ECG  that is deprived of access to its distribution network's most profitable parts, is neither in the long-term interest of the state, nor does it serve the best interests of electricity consumers in Ghana - who seek the most affordable tariff rates possible at all material times.

Only competition between electricity distributors can deliver that - not the dismemberment of the ECG's distribution network: and hiving off its most profitable parts to wealthy and well-connected regime-cronies.

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