Millennium Challenge Corporation announces closure of Ghana’s Compact amidst energy sector crisis
The Millennium Challenge Corporation (MCC) has confirmed that it currently has no immediate plans to resume working in Ghana and has closed Ghana’s Millennium Challenge Compact.
This decision comes in the wake of Ghana’s ongoing power crisis and the closure of the second tranche of funding under the MCC Power Compact.
In March 2019, Ghana was set to receive significant funding of around $190 million aimed at enhancing infrastructure investments and financial recovery in the energy sector.
However, due to complications with a concession agreement involving Ghana’s Power Distribution Services (PDS), where PDS was supposed to manage the assets of the Electricity Company of Ghana (ECG), the transfer of funds was halted by the US government.
The US government had emphasized the importance of private sector participation as a central reform under the MCC’s Ghana Power Compact.
Despite this setback, there was hope for continued collaboration between the US government, MiDA, and the Ghanaian government to implement the remainder of the Power Compact.
With Ghana’s energy sector facing challenges, including a debt of over $1.5 billion to Independent Power Producers (IPPs) and issues with defaulting on energy purchase prices, experts have called for liquidity support for the sector.
In response to inquiries about potential future support under the compact, Alice Albright, the CEO of MCC, indicated that while energy is crucial for Ghana’s development, there are currently no immediate plans to resume work in Ghana.
However, she expressed openness to reconsidering Ghana’s situation in the future.
“We did have a compact with Ghana and the compact is closed, right now we don’t have any immediate plans to work again in Ghana, but we can always look again to see if Ghana may be,” she posited.
According to Ms Albright, although having closed the Compact with Ghana, the MCC is still actively involved in energy compacts across Africa to address the continent’s growing energy needs.
