Ghana Energy Ministry: ECG PSP Clarification Rejects Privatization Claims

• The Ghana Ministry of Energy and Green Transition clarified that proposed private sector participation (PSP) in ECG and NEDCo is not privatization, as it does not involve ownership transfer.
• Richmond Rockson, the Ministry's spokesperson, stated this distinction, noting Cabinet approval in April 2025 affirmed no intent to transfer ownership.
• The arrangement aims for greater private sector involvement in operations, building on existing PSP elements in electricity sales and revenue collection.
• Government reforms since January 2025, including consolidating ECG's bank accounts and improving the cash waterfall mechanism, have enhanced revenue management and IPP payments.
• Despite improvements, ECG and NEDCo still face revenue collection challenges, with monthly targets of GH¢2.5 billion and GH¢400 million respectively, according to PURC data.

For lawyers advising clients on potential investments or partnerships in Ghana's electricity distribution sector, this official Ghana Ministry of Energy and Green Transition statement on Ghana ECG privatization vs PSP is a critical point of reference.

The Ghana Ministry of Energy and Green Transition has issued a definitive statement rejecting assertions that the proposed private sector participation (PSP) in the Electricity Company of Ghana (ECG) constitutes privatization. Speaking on Joy FM's Top Story on Tuesday, September 8, Richmond Rockson, the spokesperson and Head of Communications at the Ministry of Energy and Green Transition, emphasized that the fundamental difference lies in the transfer of ownership. He clarified that the government's planned PSP arrangement does not involve divesting ownership of either ECG or the Northern Electricity Distribution Company (NEDCo).

Mr. Rockson underscored that the distinction is not merely semantic, stating that true privatization inherently involves the transfer of ownership, whereas PSP does not necessarily entail such a change. This position aligns with a Cabinet decision from April 2025, which explicitly outlined the government's intent to avoid transferring ownership of ECG or NEDCo to private operators. This Ghana Ministry of Energy and Green Transition ECG PSP clarification is crucial for understanding the government's approach to involving private entities in the power sector.

For lawyers advising clients on potential investments or partnerships in Ghana's electricity distribution sector, this official Ghana Ministry of Energy and Green Transition statement on Ghana ECG privatization vs PSP is a critical point of reference. It signals that while private entities may engage in operational aspects, the ultimate control and ownership of these state-owned utilities will remain with the government. This distinction is paramount for structuring agreements and assessing long-term control implications.

The proposed framework aims to integrate greater private sector involvement into the day-to-day operations of ECG and NEDCo without transferring the ownership of their assets. Mr. Rockson highlighted that elements of private sector participation are already present within the existing operations of both companies, particularly in areas such as electricity sales and, in some instances, revenue collection activities. The government's current initiative seeks to expand this operational engagement rather than alter the ownership structure.

These comments from the Ministry of Energy and Green Transition follow concerns raised by the Trades Union Congress (TUC), which had argued that PSP and privatization are essentially the same. However, the Ministry maintains that its focus remains squarely on addressing the structural and financial challenges prevalent within the electricity distribution sector, rather than pursuing a full divestiture of assets. This approach defines the scope of Ghana Electricity Company private sector participation.

The government's push for enhanced private sector participation is rooted in broader Ghana power sector reforms initiated since it assumed office in January 2025. A key area of reform cited by Mr. Rockson involves significant changes to ECG’s revenue management system. Previously, ECG operated nearly 50 different bank accounts, which complicated the effective monitoring of collected revenues. To streamline this process, the Minister implemented a reform that consolidated all these accounts into a single holding account, ensuring better oversight of funds.

This consolidated account now feeds into the cash waterfall mechanism, a system designed to distribute revenues efficiently among various stakeholders within the power sector. Mr. Rockson indicated that these reforms have led to tangible improvements in revenue management, significantly reducing concerns regarding timely payments to Independent Power Producers (IPPs) and other service providers. He noted that there has been a noticeable absence of threats from IPPs or other service providers to halt generation due to non-payment, attributing this positive development partly to the prudent management of the cash waterfall mechanism.

Despite the acknowledged improvements stemming from these reforms, Mr. Rockson conceded that both ECG and NEDCo continue to grapple with revenue collection challenges. Data from the Public Utilities Regulatory Commission (PURC) indicates that ECG is expected to collect approximately GH¢2.5 billion each month, while NEDCo has a monthly collection target of about GH¢400 million. While progress has been made, the implication is that these targets are not yet consistently met.

This ongoing challenge underscores the rationale behind the government's strategy to introduce greater private sector involvement. While the reforms have enhanced financial discipline and payment reliability within the power sector, the need for improved revenue collection efficiency remains a key driver for the proposed operational partnerships, without altering the fundamental ownership of ECG and Northern Electricity Distribution Company NEDCo.

Lawyers advising clients on potential investments or partnerships in Ghana's electricity distribution sector should note the government's official clarification on private sector participation (PSP) in ECG and NEDCo, which explicitly states no transfer of ownership. This distinction is critical for structuring agreements, understanding regulatory oversight, and assessing long-term control implications for private entities engaging with these state-owned utilities.

Source: Original reporting via Joy FM