Government has assured that the suspension of the Power Distribution Services‘ concession agreement will not interrupt electricity distribution in the country.
The Ministry of Information on Tuesday evening announced the suspension of the PDS with immediate effect.
The decision according to government was taken following the detection of fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) which was discovered upon “further due diligence.”
“The Demand Guarantees were key prerequisites for the lease of assets on 1st March, 2019 to secure the assets that were transferred to the concessionaire,” a statement signed by the Minister of Information, Kojo Oppong Nkrumah stated.
Despite the action, the statement clarified that “The general public and customers are assured that this development will not interfere with the distribution of electricity services to customers.”
“The government is conducting a full enquiry into the matter, and the outcome will inform the next course of action. Government has taken steps to ensure distribution, billing and payment services continue uninterrupted,” the statement added.
Background
PDS officially took over services from the Electricity Company of Ghana (ECG) in February 2019 after winning the bid to run the power service several months earlier.
The company was expected to turnaround the operations of ECG to make it profitable.
It was also supposed to improve access to electricity while cutting down on wastage in the system as well as blocking all leakages that drained the financials of ECG.
PDS’ operations over the past few months have been fraught with many challenges including frequent power cuts and huge debt it owed some Independent Power Producers (IPPs).
Earlier this month, the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDIB) issued a seven-day ultimatum over $600 million owed it by the government.
It threatened to cut the supply of power to PDS if the amount was not paid.
The government said it was not responsible for the payment rather it was an issue between PDS and ECG and they needed to find a way to address it.
PDS later said ECG was responsible for the payment.
Days later, the Electricity Company of Ghana (ECG) confirmed receipt of GHc 200 million from PDS Limited which it said it has paid to the IPPs to defray part of the debt.
The journey to get a private sector player to manage the affairs of the ECG started after Ghana won the power compact two which was expected to inject some 900 million dollars into ECG.
Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.
Under the Power Compact, six projects were supposed to have been implemented to address the root causes of the unavailability and unreliability of power in Ghana.
The project included ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.
The rest included Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.
