The Millennium Development Authority (MiDA) will next month hold a second bidders’ conference for Shortlisted Applicants of the ECG PSP Concession, having released the three final components of the Request for Proposal (RfP) document (i.e. Rate Setting Guidelines, Sale License, and the Distribution License) to them.
From October 2 to 6, Engie Energie Services S.A (France), Manila Electric Company (Philippines) and three consortia namely CH Group (Ghana)/ EDF SA/LMI Holdings/Veolia SA, BXC Company Ghana Ltd/ Xiaocheng Technology Stock Company Limited (China)/Shaanxi Regional Electric Power Group Company Limited (China), and The Tata Power Company Limited (India)/CDC Group Plc (UK) will meet with the Government of Ghana (GoG) to seek clarification on the RfP document.
The second bidders’ conference is planned to give Shortlisted Applicants the opportunity to ask GoG parties questions about the terms and conditions of the Concession Transaction. The Applicants, at their respective meetings with government during the conference, will also have the chance to suggest ways in which the RfP documents can be made clearer on how regulatory decisions will made. Unlike the first bidders conference, which provided the Government of Ghana the opportunity to reassure Shortlisted Applicants of its commitment to the Concession Transaction in ECG and was opened to a wider number of participants, this second conference will only involve the bidders and various GoG parties such as Ministry of Energy, Ministry of Justice and Attorney General’s Department, Ministry of Finance, Public Utilities Regulatory Commission (PURC), Energy Commission (EC), ECG, and MiDA.
Activities prior to the second bidders’ conference
The Rate Setting Guidelines, Sale License, and the Distribution License, which are all crucial components of the RfP, were released to each Applicant on August 17 after stakeholders had reviewed and discussed the three documents at a retreat held in Abokobi from July 31 to August 4. Officials from the Ministry of Energy, Ministry of Justice and Attorney General’s Department, Ministry of Finance, Public Utilities Regulatory Commission (PURC), Energy Commission (EC), ECG, and MiDA, were in Abokobi over five days deliberating on the documents. Other participants included the International Finance Corporation (IFC) who are Transaction Advisors for the ECG PSP Activity, and AT Kearny- Consultants advising ECG on the Concession Transaction.
The Rate Setting Guidelines sets out the principles, methodology and the process to be applied by the PURC in determining and approving tariffs for the proposed ECG Concession. The Sale License and
Distribution License, both granted by the Energy Commission, set out the Terms and Conditions under which the Concessionaire would retail and distribute electricity in the country.
Energy Minister, Hon Boakye Agyarko, special guest at the closing ceremony of the retreat, emphasized government’s commitment to the Compact II Programme. He explained that the NPP government’s responsibility, placed on them by Ghanaians, towards solving the power challenges in the country can be summarised in the mantra “keep the lights on… and make energy affordable.” He said the country’s energy sector can no longer be run the way it has been run and encouraged all stakeholders to embrace the reforms envisaged to transform the sector. “For us, we have crossed the Rubicon, there should be no turning back because our people deserve the best that we can deliver”, Hon Agyarko said.
Earlier the Vice President, Dr Mahamudu Bawumia at the opening of the retreat, had charged the stakeholders to ensure that the documents were completed on time for submission to the bidders. He said government could not afford to let the critical timelines to complete the PSP process slip any further and therefore urged the stakeholders to always be reminded of that fact during their deliberations adding that their work at the retreat had huge implications for the millions of Ghanaians who would benefit from the Compact II Programme’s implementation.
MiDA expects to issue the final addendum to RfP to the Shortlisted Applicants on November 3. This would be after comments received from the Shortlisted Applicants during the second bidders’ conference or prior, have been reviewed, analysed and incorporated into the document. The Shortlisted Applicants will have until January 5, 2018 to submit their bids for evaluation. Between these milestones, Government will constitute a Proposal Evaluation Panel and a Negotiation Panel between December 2017 and January 2018. The selection and announcement of the winning bidder to manage, operate and invest in the electricity distribution business of the Electricity Company of Ghana (ECG) should be completed by March 2018. Financial close, the time at which all financing agreements on the Concession Transaction have been signed and all the required conditions precedent contained in them have been met, is expected to be in September 2018.
Addressing Ghana’s power challenges
The Ghana Power Compact II Programme seeks to address the root causes of unavailable and unreliable power supply which plagues the country’s power sector and slows economic growth. The six projects under the programme have been designed to tackle various aspects of the Ghana’s power challenges.
The ECG and Northern Electricity Distribution Company (NEDCo) Financial and Operational Turnaround Project activities are designed to improve the observed constraints in the governance structure of the public utility providers, as well as turn around their financial fortunes. Nearly 80 percent of the Compact funding will be expended on several activities under these two projects to improve infrastructure and implement the requisite reforms. To guarantee improvements in the regulatory and policy environment the Regulatory Strengthening and Capacity Building Project will provide capacity building to sector agencies such as PURC, Energy Commission and the Ministry of Power to enable them perform improved monitoring and supervision of the utilities. The Program will also, through the Tariff Review and Regulation Activity, review and restructure tariff setting to ensure a rigorous and responsive regulatory environment as well as strengthening ratemaking and other regulatory processes through tariff studies.
The Access project is designed to provide safe, quality and reliable electricity to in some selected markets, economic enclaves and social institutions such as schools and health facilities. The project, being implemented in collaboration with the local government authorities, upon completion is expected to increase the number of new connections in the selected markets and enclaves by reducing barriers to obtaining legal connections leading to an increased economic growth. An outcome would be the reduction in market fires caused by illegal connections to small and medium scale businesses located in markets and economic enclaves.
The Energy Commission is the lead entity in the Energy Efficiency and Demand Side Management Project. Under this project, several policy initiatives and programs are being undertaken all aimed at ensuring energy efficiency and conservation behaviours among Ghanaians. The activities making up this project are; Development and Enforcement of Standards and Labels, which will see the development of regulations and support their enforcement in the use of higher efficiency appliances, such as fridges, air conditioners, etc. with the aim of reducing overall energy consumption. The Improved Energy Auditing Activity will build national capacity in energy auditing by establishing training centres. The activity would also implement programs for evaluating energy consumption and determining ways to save and conserve energy. To inculcate energy saving behaviours in Ghanaians, the Education and Public Information activity would embark on public sensitization activities on energy efficiency and also conduct education curriculum changes that introduce energy efficiency and conservation behaviours at various levels in our public education. Demand Side Management Infrastructure Activity involves undertaking a pilot solar program and getting the public to use solar systems for addressing the high lighting loads, as well as installation of energy efficient street lighting to replace existing high energy consuming street lights.
Finally the Power Generation Sector Improvement Project will support measures aimed at opening up Ghana’s power sector, making it attractive to private investors for additional generation capacity. The objective is to increase availability, reliability, and expansion of cost-effective power generation.