In a 3-page statement, circulated widely to both local and international media, the group said the President is mixing up ‘liberalisation’ with ‘privatisation’.
Addressing participants at an ICT expo in Accra on Tuesday the President made the point that ECG is not working efficiently and that “it has to be fixed”. He went on to say that, the move to privatise ECG “is necessary to make the company more efficient”. He again argued that the government has had to similarly deregulate the telecommunication sector, and the Post and Telecommunications corporation (P&T) years ago because it was not working; suggesting that, just like P&T was converted to Ghana Telecom, and later privatised to Vodafone “there will be long term benefits if the private sector is allowed to operate in key sectors of the economy.”
But the Civil Society Platform on Oil and Gas in a sharp rebuttal, the Civil Society Platform on Oil and Gas says the President doesn’t seem able to tell the difference between ‘liberalisation’ and ‘privatisation’.
“There is clearly an inherent confusion in the comparison between liberalisation of an entire industry, with the privatisation of a state enterprise. If what is being proposed for the electricity distribution sub-sector was liberalisation, in which case other players would be licensed to compete with ECG, then the Civil Society Platform on Oil and Gas will have no qualms in supporting such plans, as there is evidence to support the assumption that competition under proper regulation could result in efficiency and lower costs to consumers.”
The group also accuses the President of having conveniently overlooked the fact that, before Ghana Telecom was sold to Vodafone, the country had tried Telenor of Norway, and Telecom Malaysia under various forms PSP and that both failed.
The group says its checks have also revealed that “Vodafone which the President gleefully cites as a success story is after all, not as successful as he would want us to believe.” Adding that, “Ghana Telecom, now Vodafone, is in fact struggling to survive competition, and barely able to break even.”
“We want to emphasise that, the type of privatisation that hands over the management, and sometimes the assets of public companies to private entities often referred to as ‘strategic investors’, have NEVER EVER worked in this country.” The statement cites Ghana Airways under Speedwing Ltd. of U.K.; Aqua-Vitends Rand in the water sector, and several other divested state enterprises that have seen the transfer of ownership to foreign interests in the name of Private Sector Participation (PSP), and have failed.
The group says it agrees with the President when he suggests that we must fix ECG’s problems, but finds it a bit strange, that he attempts to equate “fixing the problem” with privatisation.
“Our understanding of ‘fixing the problem with ECG’ is doing what Mr Kwame Awuah Darko has done with the Bulk Oil Storage and Transport (BOST) and what he is currently doing with the Tema Oil Refinery (TOR), but not the easy option of privatisation” the statement stressed.
Obsession
Other issues relative to the ECG privatisation raised in the statement have to do with the seeming obsession with a particular brand of privatisation that at all cost must involve a so-called ‘strategic investor’.
“It used to beat our imagination as to why successive governments have been obsessed with the type of PSP that involves foreign private sector entities, until the Hon. P.C. Appiah Ofori came out to reveal that money had changed hands in the Vodafone transaction, and that he was left out because he was absent from Parliament on the day the ‘booty’ was shared.”
P.C. Appiah Ofori’s revelation, according to the group, betrayed “the greed and wanton deceit that drive this particular type of privatisation agenda.”
Evidence of PSPs that have worked
According to the group, the former MP’s disclosure put the obsession with “this type of privatisation involving foreign private companies, into its proper perspective.” Otherwise, it is difficult to see why in spite of the existence of other successful models of privatisation, such as public listing, government will continue to pursue the ones that have repeatedly failed to deliver the desired results.
“At the time when government felt the need to introduce efficiency into the operations of GOIL, it offloaded majority of its stake in the company on the Ghana Stock Exchange. What that did for GOIL and Ghana for that matter, was that, it brought in new investment capital, improved corporate accountability, made the company more efficient, and brought vibrancy to Ghana’s stock market. Today, GOIL is a market leader.”
“Again, at a time when as a result of government’s interference in the affairs of Ghana Commercial Bank, the bank almost collapsed, a decision was taken by the then New Patriotic Party government to offload seventy percent of government’s stake in the bank to a strategic investor. It took a huge public campaign, led by the Integrated Social Development Centre (ISODEC) to persuade government to rather offload its stake on the Ghanaian stock exchange. It is revealing to note here, that, Ghana Commercial Bank was able to raise more capital than it needed;” the statement argued.
The group therefore considers that the decision to privatise ECG has not been well thought through. It suggests that “the whole agenda is being pushed by American interests,” adding that, “the unprecedented increases in electricity tariffs, which have been further compounded by the over thirty percent taxes imposed on consumers, are nothing but part of government’s commitment to the Americans to bring tariffs to attractive levels before handing over to the foreign investor.”
The statement calls for a national dialogue on how to vary the proposed reforms of the power distribution sector in a way that better serves the national interest, arguing that if a Ghanaian, Kwame Awuah Darko has been able to resuscitate the Bulk Oil Storage and Transport (BOST) and the Tema Oil Refinery (TOR), then there certainly can be a home-grown solution to the challenges ECG faces today.
Source: Public Agenda
