…MCA II deal expected mid-year
The Millennium Challenge Corporation (MCC) says the
second compact, which will focus on solving the country’s energy and power
challenges, is due to take off by the middle of this year.
Mr. Jonathan Bloom, Deputy Vice-President, Africa
Department of Compact Operations of the MCC, disclosed this in an interview in
Accra.
“Ghanaians should be excited after the signing ceremony.We
are hoping to get through our board and have the signing ceremony certainly
toward the middle of this year.
“The processes will be approved by the board, which
will be followed by the signing ceremony -- and it’s only at the end of this
that the big money starts to flow, paving the way for work to start on the
second compact which is estimated to be worth hundreds of millions of dollars.”
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.
The second phase of the compact will finance the
country’s irregular and insufficient power supply. It will be targetted at
enhancing the distribution system, effecting institutional changes and creating
a Power Park to boost energy consumption.
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
November last year, government submitted a concept-paper proposal to the board
of directors of the MCC to support power generation and distribution in the
country.
Currently,
a team of US technical experts are engaging with government and finalising
plans for the second phase.
Mr. Bloom said: “There has been a team that has come
several times, because the critical process for the MCC is preparing in great
detail to know what is going to be done by who, when, what result to expect,
through what mechanisms, for what amounts of money -- and so we design all that
with a team from the Millennium Development Authority (MiDA).
“We’ve been going on for three years now, which is
an unusually long time; but because we are tackling one of the biggest problems
in the country -- we are seeking access to reliable power -- it is a difficult
problem to solve.”
Mr. Bloom commended government through the
Electricity Company of Ghana and the Ministries of Finance and Energy for
having very solid plans for the compact.
“I think the compact should result in the right kind
of structures to provide a sound foundation for building power in the future.The
decision that the Public Utilities Regulatory Commission (PURC) made in October
2013 to raise tariffs substantially was a politically courageous decision.
“It was necessary, but it requires courage. In many
countries they cannot advance because their leadership doesn’t make those hard
decisions. So I congratulate the government on making those hard decisions, but
it takes time,” he stated.
Commenting on the benefits to be derived from the
signing of the compact, Mr. Broom explained that the initial US$8million grant
agreement signed between the government and the MCC in July 2013 was to
facilitate feasibility studies in engineering and consultancies, and had
greatly contributed to the progress made so far toward the compact’s take-off.
“That US$8million has substantially been spent, and
it is essentially what has enabled us to make a lot of progress,” he said.
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.
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