Ghana Seeks to Renegotiate $190 Million MCC Compact for Energy Sector Reforms
President John Dramani Mahama has announced Ghana’s readiness to engage the United States Government for the potential reinstatement of $190 million under the Millennium Challenge Corporation (MCC) compact, initially allocated to the electricity sector.
Speaking during a courtesy call by Mr. Ousmane Diagana, World Bank Vice President for West and Central Africa, President Mahama emphasized the importance of addressing inefficiencies in the energy sector to stabilize its operations and reduce debt.
Renewed Focus on Energy Sector Reforms
President Mahama expressed regret over setbacks in the Millennium Challenge Compact, including challenges surrounding the now-defunct Power Distribution Services (PDS). He underscored the need to revisit the privatization of electricity distribution to infuse private-sector efficiency into the sector.
“If we do not fix the Electricity Company of Ghana (ECG), we will continue to have a major problem with our whole power value chain,” President Mahama stated.
He revealed that initial discussions with the MCC indicate that a reopening of talks is possible. “The door is not closed,” he remarked, adding that Ghana would actively pursue this opportunity.
Support from the World Bank
In the absence of access to the $190 million, President Mahama highlighted the need for alternative support. He appealed to the World Bank to assist in completing critical reforms to reduce electricity losses, particularly in relation to independent power producers (IPPs).
Mr. Ousmane Diagana reaffirmed the World Bank’s commitment to Ghana’s socioeconomic agenda. He noted that the Bank would work closely with the government to ensure efficiency and sustainability in the country’s energy sector.
Historical Context and Forward Strategy
President Mahama recalled signing the MCC compact during his tenure as Vice President under the late President John Evans Atta Mills. The agreement was aimed at positioning Ghana as a leader in electricity production and a regional power hub.
However, political transitions disrupted progress, particularly in implementing measures to improve billing, metering, and distribution. To stabilize the sector in the short term, Mahama committed to restoring transparency and reactivating the cash waterfall mechanism—a system designed to ensure equitable cash distribution across the power sector’s value chain.
Path to Stability
The President’s remarks signal a renewed commitment to revitalize the energy sector through collaborative efforts with international partners. By addressing inefficiencies and pursuing key reforms, Ghana aims to secure sustainable energy solutions and strengthen its economic foundation.
