2nd Millennium Compact ready by 2014

Ghana is likely to access approximately US$500million from the second phase of the Millennium Challenge Account compact by the middle of 2014. 
 

Out-going Country Director of the Millennium Challenge Corporation (MCC), Katrina Ntep, told journalists in Accra that discussions on the compact are currently ongoing and she hopes the programme will be very well-formed by the end of this year to pave the way for the signing and official launch by mid-2014.

She said Ghana is one of two countries that have been eligible for the grant since 2004 on a continuous basis, and the country’s performance and indicators continue to be strong.

“I know that there are challenges at the national level, but when you compare Ghana’s performance to other countries’ performances, Ghana is very strong,” she said.

The second phase of the compact, Ms. Ntep said, will finance the country’s irregular and insufficient power supply. The grant will be targetted at enhancing the distribution system, effecting institutional changes and creating a Power Park to boost energy consumption.

“The country needs to improve the distribution system and make institutional changes at all stages within the power sector. Everybody is familiar with the Electricity Company of Ghana (ECG)’s performance. I think something can be done to support and incentivise institutional changes to improve business processes and reduce losses from lack of collection -- or there can be systems to identify theft more easily.”

In November, Government submitted a concept-paper proposal to the Board of Directors of the MCC to support power generation and distribution in the country.

Ms. Ntep said, currently, a team of US technical experts are engaging with Government and finalising plans for the second phase.

She observed that the power sector is a high-risk area, and that the MCC is interested in investing into high-risk ventures with high rewards -- as in the case of the power sector, because it impacts all sectors of the economy and more Ghanaians are expected to benefit.

Ghana’s demand for power is growing at around 10 percent per annum, spurred by robust economic growth and rising consumption. 

B&FT has gathered that the funds expected from the second compact will enable the country to construct a 400-megawatt thermal plant in the next three years to reduce over-reliance on hydropower generation.

In August 2006, Ghana signed the first compact for an amount of US$547million, making it the third-biggest beneficiary of this initiative by the United States Government after Tanzania (US$698million) and Morocco (US$69million).

The five-year compact came into force on February 16, 2007. The agricultural sector was the main focus, but transportation and rural development were also covered. In January 2011, Ghana was reselected with two other countries for the second compact.