By Godwill Arthur-Mensah, GNA
Accra, Oct. 23, GNA – 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.
GNA
