Privatization of ECG is not the solution: a plea for sustainable public ownership

The Electricity Company of Ghana (ECG) has been the subject of discussion about its privatization for years. Proponents argue that privatization could improve efficiency and service delivery, while critics express concerns about potential downsides. Frankly speaking, privatization of ECG will not be the optimal solution and argues for sustainable public ownership.

History in pictures

Before the privatization of ECG to Power Distribution Services (PDS), ECG paid more than 80% of monthly bills due to Independent Power Producers (IPPs) and has kept our operations running smoothly.

However, after privatization, a dramatic shift occurred: ECG stopped receiving any revenue, leaving it unable to meet its financial obligations to the IPPs, and its debts built up to more than $1.8 billion.

This call for the privatization of the ECG should not be driven by some imaginary ideal organization that will overcome all its challenges just because it has been privatized.

As a country we have been down that path many times in the past, but what has been the effect on those organizations?

In the debate on the privatization or otherwise of the ECG, the following facts must be taken into consideration:

1. Importance of reliable electricity:

Electricity is an essential part of economic development, powering industries, homes and essential services. In Ghana, ensuring a reliable electricity supply is crucial for achieving sustainable development goals and improving living standards.

2. Challenges of Privatization:

A. Profit maximization versus public services: Privatization often prioritizes profit maximization over public services. Private companies may focus on affluent areas, neglecting rural and low-income communities.

B. Tariff Increases: Privatization can lead to tariff increases, burdening consumers, especially those with limited purchasing power.

C. Job Loss: Private ownership can lead to a reduction in the workforce, exacerbating unemployment and social problems.

D. Infrastructure Neglect: Private investors may prioritize short-term profits while neglecting long-term infrastructure investments necessary for national development.

3. Lessons from other privatizations:

A. Water Privatization in Ghana: Previous attempts to privatize water utilities in Ghana led to service deterioration, tariff increases and public resistance, ultimately resulting in remunicalization.

B. Global Examples: International experiences with utility privatization have produced mixed results, with cases of failure and renationalization due to concerns about the quality of service.

4. Alternative solutions:

A. Efficiency Improvements: Improving ECG operational efficiency through modernization, technology adoption and capacity building can improve service delivery without privatization.

B. Regulatory Reforms: Strengthening regulatory frameworks to ensure accountability, transparency and consumer protection is critical to improving utility performance.

C. Public-private partnerships (PPPs): Collaborative models that combine public ownership with private sector expertise can leverage efficiency gains while safeguarding public interests.

5. Sustainable public ownership:

A. Community engagement: Empowering communities in decision-making processes ensures that electricity supply meets local needs and priorities.

B. Investing in human capital: Investing in ECG’s workforce and equipping them with the necessary skills improves the quality of service and promotes organizational resilience.

C. Long-term planning: taking a strategic approach to infrastructure and service development ensures sustainable access to electricity for future generations.

Privatization of ECG may seem attractive, but it poses significant risks to equitable access, affordability and quality of service.

Rather than pursuing privatization, Ghana should focus on strengthening the governance structure of ECG and the sector as a whole (a comprehensive representation on ECG’s board), public ownership, regulatory oversight and community involvement in responsible consumption (as a patriotic duty). to pay for the energy used), to achieve a sustainable electricity supply.

By learning from past experiences and embracing innovative solutions, Ghana can overcome energy supply challenges while promoting inclusive development for all its citizens.

Recommendation to maintain public ownership of ECG

Your Excellency,

I humbly recommend that the public ownership of the Electricity Company of Ghana (ECG) be retained, amid the clamor for privatization.

Privatization could jeopardize the accessibility, affordability and stability of electricity services, which are critical to national development.

By preserving public ownership, we ensure accountability, equitable access, and strategic governance control over a vital national asset.

This decision is in line with the commitment to serve the interests of all citizens and safeguard Ghana’s energy future. If the conditions imposed on PDS at the time can be made available for the current state of ECG with a reformed board composition, there will be a change in 3 months.

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