The Executive Director of the Institute for Energy Security (IES), Nana Amoasi VII, has raised concerns about the proposed mergers within Ghana’s energy sector outlined in the New Patriotic Party (NPP) manifesto.
According to him, while merging certain entities could improve efficiency, the timing and approach need careful consideration to prevent further destabilization of the energy sector.
Nana Amoasi highlighted specific merger proposals by the NPP, which include combining the Public Utilities Regulatory Commission (PURC) with the Energy Commission, merging the Electricity Company of Ghana (ECG) with the Northern Electricity Distribution Company (NEDCo), and consolidating the Bui Power Authority with the Volta River Authority (VRA).
“They have been clear with their intention,” he said, but he noted that the opposition party, the National Democratic Congress (NDC), has also alluded to a “realignment of entities” in its manifesto, though without providing concrete details.
Nana Amoasi explained that, in principle, mergers can be beneficial, likening them to a company restructuring to cut costs and boost efficiency.
However, he emphasized, “For us today, we ask, is the timing right to put the VRA and Bui together? You will say they are all hydro-based assets, but remember, VRA runs both hydro and thermal.”
He further explained that while Bui is fully hydro, VRA’s hydro assets serve non-paying clients like ECG and the Volta Aluminum Company Limited (VALCO), and its thermal assets are essential to keeping the organization financially viable by directing exports to the more reliable, cash-paying market.
“If you hive off the thermal assets of VRA and put the hydro of VRA and Bui together, you’ve exposed VRA. You’ve made it more vulnerable,” he said, emphasizing the risk of isolating VRA’s more reliable revenue streams.
Nana Amoasi argued that the first step should be addressing the liquidity issues and inefficiencies plaguing the sector.
“Go and deal with the liquidity challenge. Go and deal with the cash waterfall system, the inefficiencies in ECG, in NEDCo,” he urged.
He pointed out that high transmission losses continue to hinder GRIDCo’s efficiency, which adds to the sector’s problems.
Commenting on the proposed merger between ECG and NEDCo, Amoasi compared it to “putting two lame men together and calling them a ‘faith man.’”
He explained, “NEDCo is struggling. ECG is struggling. You say you want to put two lame men together and call them what—‘faith man’? It’s impossible.”
For Nana Amoasi, combining two struggling entities could exacerbate their weaknesses rather than lead to a stronger entity.
He suggested that once inefficiencies are resolved and the sector is stable, a merger could be a “strategic approach.”
Nana Amoasi reiterated, “The timing is wrong, though it’s not a bad approach.”
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