As Ghana’s government advances plans for private sector involvement in the Electricity Company of Ghana’s (ECG) retail operations, investment banking firm C-NERGY Ghana Limited is calling for a different approach—one that leverages the banking sector to tackle ECG’s worsening foreign exchange losses.
In its review of the 2025 budget, C-NERGY argued that while privatization could enhance revenue collection and operational efficiency, it does not address the root cause of ECG’s financial troubles. The firm highlighted foreign exchange losses as the primary driver of the utility’s mounting debts, advocating for a homegrown financial strategy instead of partial privatization.
Can Ghana’s Banks Step In?
C-NERGY suggests that Ghana’s banking sector could play a pivotal role in stabilizing ECG’s finances by implementing:
- Forex hedging mechanisms to mitigate currency risks.
- Structured financing solutions to manage cash flow shortfalls.
- Syndicated lending from local banks to reduce dependence on foreign borrowing.
This financial engineering approach, the firm argues, could provide ECG with much-needed liquidity while aligning with the broader goal of economic stability and the government’s push for a 24-hour economy.
Privatization Push Meets Resistance
Despite the government’s insistence that private sector participation will improve ECG’s efficiency, the proposal has sparked strong opposition from labor unions, including the Trades Union Congress (TUC) and the Public Utility Workers’ Union (PUWU).
The unions warn that privatization could lead to job losses and a loss of national control over a critical utility, pointing to past failures such as the Ghana Airways collapse, the botched privatization of Ghana Telecom, and the ill-fated Power Distribution Services (PDS) deal in 2019.
The Bigger Picture: Economic and Policy Implications
C-NERGY’s call for financial sector involvement raises key questions for policymakers:
- Can local banks absorb ECG’s forex risks without adding stress to the financial sector?
- Would a structured financing model prevent future debt accumulation in the power sector?
- Is privatization being prioritized at the expense of deeper financial and structural reforms?
