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President John Dramani Mahama has announced plans to reopen discussions with the Millennium Challenge Corporation (MCC) for the release of a US$190 million grant to support reforms in Ghana’s electricity distribution sector.
Speaking during a meeting in Accra on Wednesday with Ousmane Diagana, the Regional Vice President for Western and Central Africa at the World Bank, President Mahama highlighted the critical state of Ghana’s energy sector, describing it as the “Achilles heel” of the nation’s financial and economic stability.
“I spoke to the Americans during my last visit to the US. We met with the MCC and we asked if it was possible for them to reinstate the US$190 million that they had devoted to it, and they said the door is not closed. So we need to pursue that discussion,” the President disclosed.
MCC grant and energy sector reforms
The US$190 million grant was initially part of the Ghana Power Compact, a US$316 million agreement signed by President Mahama in 2014 to address inefficiencies in the power sector. However, Ghana lost access to the funds following the cancellation of a concession agreement between the Electricity Company of Ghana (ECG) and Power Distribution Services (PDS) in 2019.
President Mahama stressed the importance of fixing the ECG to build a resilient energy sector capable of supporting economic growth.
“We want to take a look at that again because if we don’t fix the ECG, we will continue to have a major problem with our whole value chain. So going ahead with privatising the last point of distribution of electricity to bring in private sector efficiency is something we want to take up again,” he emphasised.
In addition to seeking the reinstatement of the MCC grant, President Mahama revealed plans to collaborate with the World Bank for technical expertise to address inefficiencies in the energy sector, particularly losses associated with Independent Power Producers (IPPs).
“The MCC grant notwithstanding, we will fall on the World Bank for the needed expertise to undertake that exercise so that we can reduce the losses where it has to do with the IPPs,” he noted.
For the short term, the President stated that his government’s priority is to restore transparency and stabilise the energy sector through measures such as the reinstatement of the cash waterfall mechanism.
Mr Ousmane Diagana assured Ghana of the World Bank’s readiness to support the country in tackling the persistent challenges in the energy sector.
He described Ghana’s energy sector as a long-standing concern for the World Bank, stating that it “needs fixing.”
The Ghana Power Compact with the MCC was designed to transform the country’s energy sector through investments in power infrastructure, promoting energy efficiency, and creating inclusive economic opportunities. Signed in 2014, the pact aimed to resolve bottlenecks in the sector and improve service delivery.
