Following termination of PDS agreement: Govt draws roadmap for ECG to take over power distribution .US govt cancels $190m outstanding balance

The government in the coming weeks will announce a new roadmap for the operations of the Electricity Company of Ghana (ECG) following the termination of the concession agreement with the Power Distribution Services (PDS) Limited.

This is to ensure that, gaps are not created for the potential disruption of operations and activities of the ECG in the area of power supply to the country.

The decision to terminate the concession agreement with the PDS comes in the wake of what government has described as failure of PDS, which is the concessionaire to meet some material and fundamental terms of the concession agreement.

Addressing the media on the development in Accra yesterday, the Minister of Information, Mr Kojo Oppong Nkrumah, said both the Government of Ghana (GoG) and the United States Government had come to a conclusion on the resolution of residual matters bothering on the Compact II agreement.

He said in the spirit of protecting the nation’s interest, government had decided to terminate the concession agreement with PDS Limited which was the properly selected concessionaire for the Private Sector Participation in ECG.

Mr Nkrumah explained that in return for government’s decision, the US government had also de-obligated to make available the $190 million which was the outstanding balance of the $498million Compact II financial commitment.

“The Ghanaian and American sides regret that we could not find a mutually agreeable path to have concluded the utilisation of the full 498 million dollars,” he emphasised.

 The minister further explained that GoG would not compromise on its earlier stands because it had been advised and believe same to be true that the concessionaire failed as initially suspected to have met a material and fundamental term of the concession agreement; which was to deliver and maintain valid payment securities for the transfer of assets.

“On the American side, though the insurer has indicated that they do not intend to stand by the purported guarantees, the view is that a termination is unwarranted and a restructuring will be more tolerable,” he said.

Mr Nkrumah noted that the processes to terminate the concession agreement consequently started at 9:30am yesterday as a result the necessary documentations were being filed with the PDS and the Energy Commission.

“It is expected that residual matters between ECG and PDs will be resolved with dispatch,” he emphasised.

Mr Nkrumah said the ECG had always remained in possession of assets, while PDS had been assisting it with some limited services in the period during which the concession was suspended prior to the decision to terminate the agreement.

He explained that the GoG and USG would continue to work together on other development cooperation projects, stressing that “This has not been a crisis of confidence between us and the Americans; It has been a difference in opinion which we have mutually agreed to respect.”

Mr Nkrumah also used the occasion to address a number of issues which had arisen during the intervening period of the agreement.

He said the failure to deliver and maintain valid securities earlier was a non issue due to the fact that the actual documentation to bring the concession to finality was supposed to have ended in September which was also the same period for the conditions to subsequently end.

The minister said government could not be said to have been negligent in this transaction since it had worked with the Millennium Challenge Corporation at all material times in structuring the transaction in the interest of Ghanaians.

He also denied the assertion that government had been up to some machinations, adding that “The intent has been to ensure efficiency in the ECG turnaround and the fulfilment of the broader compact.”

Mr Nkrumah said if for nothing at all, the President would have to be commended for defending the interest of Ghana as against the interest of any group or individuals.

He said the decision taken by government as difficult as it was owing to the significant international pressure was necessary to protect and preserve the assets of ECG and Ghanaians.

“President Akufo-Addo took a solemn oath before God and the Ghanaian people that he will be faithful and true to the Republic of Ghana. That he will dedicate himself to the service and well being of the people of the Republic of Ghana. He has done exactly that,” he emphasised.

On his part, the Deputy Minister of Energy, Mr Ewuraku Aidoo, said following the termination of the agreement, the ECG would soon assume the full control of its assets and operations once the termination processes were completed.

He said there was no transfer as the processes were still ongoing as a result workers of ECG as well as that of PDS would not be affected by the termination, adding that “We will be meeting the unions of ECG to fashion-out the way forward.”

The GoG in 2014 signed up to the compact agreement and opted for Private Sector Participation in the turnaround of ECG, however, the initial agreement was for a foreign entity to own 80 per cent while local Ghanaian entity was to hold 15 per cent.

In 2017, the government of President Akufo-Addo negotiated for the Ghanaian participation to be moved from 20 per cent to 51 per cent and that of the foreign entity from 80 per cent to 49 per cent.

Meanwhile the United States of America (USA) has stated that it notes with regret the decision by the Government of Ghana to terminate the concession agreement with the Power Distribution Service (PDS).

A statement issued by the embassy in Accra stated that based upon the conclusions of the independent forensic investigation, the transfer of operations, maintenance, and management of the Southern Distribution Network to the Private concessionaire on March 1, was valid and therefore the termination was unwarranted.

It said following the government’s decision, the Millennium Challenge Corporation (MCC) had confirmed that the $190million funds granted to Ghana at the March 1 transfer to the 20-year concession from ECG to PDS were no longer available.

The statement said moving forward the U.S Government through the MCC would continue to implement the tranche 1 fund of $308million with the Millennium Development Authority (MiDA).

“This funding will continue to support important improvements to infrastructure of Ghana’s Southern distribution network, increase reliability and power access to key markets, and advance energy efficiency programmes directly benefiting the people of Ghana,” it emphasised.

It further stated that the US government was a committed partner and had full confidence in MiDA to lead the joint effort to deliver the projects funded through the $308million remaining under the MCC Ghana Power Compact.

“The US Government looks forward to continuing to work together with MiDA and the Government of Ghana to implement the remainder of the power compact,” it said.

By Cliff Ekuful

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