The Northern Electricity Distribution Company (NEDCo), will be missing 54,191,650.00 US Dollars out of the 498,200,000 US Dollars grant to be awarded it, under the millennium Challenge Compact (MCC) between Ghana and the United States of America.
This is due to the redirection of a portion of the NEDCo Financial and Operational Turnaround (NFOT) grant, to meet different needs elsewhere without the attention of the management of NEDCo. This was revealed during a press briefing organized by NEDCo in Tamale, on Monday, 11 March 2019.
In his address the Manager, Corporate Communications, Mr. Maxwell Kotoka noted that the agreement which was reached in August 2014 through the Millennium Development Authority (MiDA), was to help provide technical assistance to the beneficiary company NEDCo.
It also aimed at strengthening the managerial and technical capacity of NEDCo to ensure that the planned investment in its operational areas were sustainable over time. The said grant would have improved access to reliable electricity among Micro, Small and Medium Enterprises in selected markets within NEDCo’s operational area, he noted.
Mr. Kotoka added an implementation Entity Agreement (IEA) signed by NEDCo and MiDA in March 2018, spelt out roles and responsibilities for both parties. The Managing Director NEDCo, Ing. Frank Akligo indicated that the company has gotten to appoint where they intend to be much open to their customers regarding funding issues.
He as well noted that power theft has been a major issues that leads the company to seeking loans to help run it better. According to Ing Akligo, if customers pay for power consumed appropriately, that funds generated alone could help improve service delivery.
Meanwhile the management of NEDCo assures its customers and the general public that they have in place pragmatic measures to secure similar funding to help achieve the same objectives.
Below is a copy of the release
PRESS BRIEFING BY NEDCO ON THE MISSED FUNDING OPPORTUNITY FOR
THE NEDCo FINANCIAL AND OPERATIONAL TURNAROUND (NFOT) PROJECT
HELD AT THE NEDCo CLUBHOUSE ON MONDAY, MARCH 11, 2019.
Distinguished Members of the Media, Ladies and Gentlemen, Good Afternoon to you all. On
behalf of the Management and Staff of Northern Electricity Distribution Company (NEDCo),
we wish to welcome you all to this briefing and to immensely thank you for responding to
our invitation at such a short notice.
Essentially, our reason for gathering all of you here today is to, in the spirit of transparency
and accountability, brief you on some vital developments within your company, NEDCo, in
the recent past. At the centre of these developments is a proposed grant from the
Millennium Challenge Corporation (MCC) through the Millennium Development Authority
(MiDA) which would have been injected into the operations of NEDCo with the view to
strengthening NEDCo’s operational and commercial capabilities towards full autonomy and
ultimately, toughening her (NEDCo) to be able to contribute to economic growth in the
northern parts of Ghana and beyond.
BACKGROUND TO NFOT
On August 5, 2014, the Republic of Ghana and the United States of America, acting through
the MCC entered into a Millennium Challenge Compact (also known as the Power Compact)
which provided for a grant of up to Four Hundred and Ninety Eight Million, Two Hundred
Thousand United States Dollars (US$ 498,200,000) to advance economic growth and reduce
poverty in Ghana. Fifty-four million, One Hundred and One Thousand, Six Hundred and Fifty
US Dollars ($54,191,650.00) out of the total amount was to be used to implement electricity
improvement projects in some parts of the Northern Electricity Distribution Company
Limited (NEDCo) operational areas under the auspices of MiDA. To have been implemented
were the: NEDCo Financial and Operational Turnaround (NFOT) Project and Access Project.
The NFOT project sought to provide Technical Assistance under the Private Sector
Participation and Modernizing Utility Operations activities while the Access Project sought
to improve access to reliable electricity among Micro, Small and Medium Enterprises in
selected markets and economic enclaves in urban and peri-urban areas in NEDCo. Both
projects were inextricably tied together.
As part of the project implementation arrangement, the Compact provided for Private
Sector Participation (PSP) in the program in the form of a Management Contract (MC), the
full description and nature of which was to be determined after MCC was assured of its
acceptability to all stakeholders and a Transaction Advisor (TA) had been appointed for the
Meanwhile, as part of the arrangement, an Implementation Entity Agreement (IEA) was
signed between MiDA and NEDCo on March 14, 2018 to spell out the specific roles and
responsibilities of all parties. The Compact averred that the PSP arrangement was aimed at
strengthening the managerial and technical capacity of NEDCo to ensure that planned
investments in its operational area were sustainable over time; this laudable objective
notwithstanding, the NFOT had barely two years (including the over 6 months required for
the TA to set up the requisite structures/ Terms of Reference for engaging the MC.
Key among the objectives of the twin projects were:
Rehabilitation/upgrade of lines and underground cables to replace ageing medium
voltage conductors and underground cables.
Re-configuration of the network towards making it a High Voltage Distribution
System (“HVDS”) to reduce the length of the low voltage circuits to ensure they are
not excessive so as to affect the quality of service and reliability of supply.
Construction of two primary substations with interconnecting sub-transmission links
and medium voltage offloading circuits to help reduce technical losses and avoid
extended outages caused by failures or maximum capacity reached at geographically
Installation of Automatic Meter Reading (“AMR”) technology at the Bulk Supply Point
(“BSP”), feeders and other critical nodes on the NEDCo system to allow for more
frequent energy meter reading, introduction of more frequent billing cycles for large
commercial or industrial customers, and energy balancing, all to provide NEDCo with
the ability to identify and monitor where technical and commercial losses are
Intensification of reactive power compensation for primary substations to optimize
power levels at 34.5/11 kV substations by installing more capacitor banks.
Customer densification and intensification to increase the number of commercial
customers in urban areas with under-utilized transformer capacity where
commercial activity can be enhanced by electric service through strengthening and
expanding medium and low voltage circuits, accompanied by targeted
communications campaigns, to support new commercial connections.
NFOT FUNDING FALLS THROUGH
Ladies and Gentlemen, the lofty objectives of the MCC grant notwithstanding, it (the grant)
has had to be re-directed to meet different needs elsewhere apparentlly for two reasons viz:
The condition that the full outline and contours of the MC could only be discussed
and determined after MCC was satisfied that the MC was acceptable to all proved to
be quite an unsurmountable hurdle.
The time left on the Compact II for the drill down of all the conditions precedent
including getting a TA to work with all stakeholders to reach the Terms of Reference
for the MC and the procurement processes required to engage one proved to be too
THE WAY FORWARD
Distinguished Members of the Media, Ladies and Gentlemen, much as the news of the loss
of the funds sounds disheartening and perhaps, even scary, we wish to assure our cherished
customers and the General Public that the Management of NEDCo has in place some
pragmatic measures to secure similar funds with conditions that make us fairly confident to
announce them to you now under these circumstances. With these funds, we are sure to
achieve the same objectives (if not more) so we urge all to remain calm. Below are a few of
AB & David – US$ 100 million with high prospects of raising more concessionary
Techno Electric & Engineering Comp Ltd – US$100 million with high prospects of
raising more funds.
Pear River – US$10 million (To be used for executing the identified project[s] for
repayment to commence only afterwards).
The World Bank – US$1.5 million with a fair chance of securing more concessionary
Swiss State Secretariat for Economic Affairs – US$1.5 million with a fair chance of
securing more should the need arise.
These aside, there are a few more but as always, you can be sure that Management will be
very responsible in committing the company financially because, we know too well that
stable electricity supply is the backbone of the economy. Just as we have not failed you in
the past, so can you count on us not to fail you now or in the future.
Finally, permit me to state that irrespective of how much re-capitalization we seek and
secure, consumers would have to play their parts responsibly by conserving power and
paying sincerely for what they consume. Nobody will be willing to invest in our operations
knowing that we cannot collect money for the power we procure and distribute. As we play
our part, we beseech the consumer to also do his/her bit.
We hope to continue counting on all of you as we ceaselessly work to strengthen and
adequately resource NEDCo to live its corporate tagline of being “your safe and reliable
power supplier”. Thank you. God bless us all.