About $500 million of the Millennium Challenge Compact (MCC) funds would be released to Government by December this year after Ghana failed to meet the necessary conditions for the release of the funds by May 2015.
The United States (US) government, which disclosed this, said the country was expected to meet certain conditions like improving regulations of the power sector and restructuring the operations of the Electricity Company of Ghana (ECG) before the disbursement of funds.
Vice President of the Millennium Challenge Corporation, Kamran Khan said it was necessary to institute such measures to ensure the effective use of the funds.
‘The right things must be done before the money is released and we’d rather have those things done right than to just check off and say they are done and then start moving.
‘We will wait, we will do it when they are done right because that’s what people of Ghana want’.
Meanwhile the MCC has insisted that ECG will not be privatised as part of conditions for disbursing the funds.
Mr Khan however explained the Ghana government had decided on a concession and is ‘absolutely different from privitisation.
According to him, the concession is a contract government will have with the private company to make an investment in the operations of ECG.
This contract will take into account the interest and concerns of all facets of society which will moderate operational standards of any company that invests in ECG.
At the end of the contract, the private company will be required to return all assets to the ECG.
The country last year signed an agreement with the US government to release some $498 million to help transform Ghana’s power sector. The MCC funds will be disbursed over a five-year period.
MCC’s $498.2 million compact with Ghana will fight poverty by transforming the country’s energy sector.
The five-year compact, the largest U.S. Government transaction under Power Africa, is expected to catalyze billions of dollars in private energy investment.
The five-year Ghana Power Compact seeks to create a financially viable power sector that will meet the current and future needs of households and businesses, and ultimately help fight poverty across the country.
The Ghana Power Compact will serve as an anchor for increased American engagement in Ghana.
Government is expected to implement the needed reforms to transform Ghana’s power sector.
It has also pledged to invest at least $37.4 million of its own money, and the compact is expected to catalyze at least $4.6 billion in private energy investment and activity from US firms in the coming years.
MCC will make an initial investment of up to $308.2 million, including funding to put the Electricity Company of Ghana, the country’s main distribution company, on a sustainable path, help the utility meet current electricity needs and upgrade infrastructure to reduce outage and improve service.
A second tranche of up to $190 million will be made available if Ghana accomplishes a set of reform targets set forth in the Compact.
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