The Government of Ghana on Wednesday officially announced the cancellation of the Concession Agreement with the Power Distribution Services (PDS) Limited regarding the distribution of electricity in the southern sector of the country.
The Energy Commission has been tasked to file the necessary documentation with the PDS towards the cancellation of the Concession, while efforts are ongoing to resolve any residual matters between the Electricity Company of Ghana (ECG) and PDS.
Government gave the assurance that the cancelation would not disrupt the supply of electricity to homes and industries, since ECG had been in charge of power distribution in the country at the time of PDS’ suspension.
Mr Kojo Oppong Nkrumah, the Information Minister, who announced this at the weekly media briefing in Accra, said the Government of Ghana and the United States Government concluded on the resolution of the Concession Agreement after they failed to find an agreeable path on the matter.
In view of that, the US Government had decided to withdraw US$190 million out of the US$498 million support for Ghana, under the Millennium Challenge Corporation (MCC) Power Compact Agreement, to revamp the energy sector, he said.
However, the US Government would provide the remaining US$308 million tranche to Ghana to continue the implementation of the Ghana Power Compact II.
The Minister said Ghana and the US could not find an agreeable path to fully utilise the entire US$498 million because Ghana could not compromise on the fundamental and material breaches of the Concessionaire (PDS), who failed to secure a valid payment securities for the concession transaction.
He said government took the decision because it was in the best interest of the nation and assured of Government’s preparedness to continue to work with the US Government on other development co-operation projects.
Mr Oppong Nkrumah said the Finance Minister, Mr Ken Ofori-Attah, in subsequent days would outline Government’s plans on the way forward towards addressing private sector participation and other residual matters.
On October 19, 2019, the Government of Ghana informed the Millennium Challenge Corporation in Washington D.C of its decision to terminate the concession agreement with the PDS after an independent forensic audit revealed that, the Demand Guarantees provided by the Concessionaire was invalid.
The decision, therefore, re-affirmed the earlier report that, there was no approval by a Competent Signatories to the Demand Guarantees issued by a Qatari re-insurance firm, Al-Koot, to the PDS to cover the concession.
A Demand Guarantee is a condition precedent for the transfer of the ECG’s assets worth three billion dollars to the Concessionaire for operationalisation, maintenance and management of the ECG’s assets for a period of 20-year.
The Millennium Challenge Compact was signed on August 4, 2014 between the Millennium Challenge Corporation (MCC) acting on behalf of the United States Government and the Government of Ghana acting through the Minister of Finance, with the aim at revamping Ghana’s energy sector under private sector participation.
Therefore, the Millennium Development Authority (MiDA) was tasked to search for a competent Concessionaire that has the financial worthwhile to inject capital into the operations of the ECG to ensure efficient management of electricity in the country.
In view of that, an international competitive tender process was operationalised leading to the selection of Meralco Consortium of Philippines with 30% shares, AEnergia S.A (Angola) with 19%, while the GTS Engineering Services of Ghana, Santa Baron Ventures of Ghana and TG Energy of Ghana, together have 51% shares.