Energy Minister, John Peter Amewu, has admitted that government could not perform enough due diligence in a concession agreement with Power Distribution Service (PDS) due to a deadline by which the contract should have started.
Per a five-year Millennium Challenge Corporation Compact with the United States of America which expires this year (2014-2019), Ghana stood a chance of benefitting from about $500 million to address challenges in distribution, generation and access in the energy sector.
In a bid to beat time, government on March 1 ceded some assets and activities of the Electricity Company Ghana (ECG) to Meralco-led Consortium, PDS, to among others cut distribution losses and ensure improved power services to Ghanaians, but the agreement has now been terminated.
Mr Amewu in a media interview to clarify issues yesterday, noted that intelligence gathered after the company had began operations, revealed that government may have been defrauded in the deal as the company that PDS claimed was their security, Al Koot based in Qatar, did not have any such agreement with PDS.
According to the minister, the official from Al Koot, who allegedly forged the signature to the agreement, has since been suspended by his employers, hinting of a full-scale investigation into the fraudulent act with possible prosecutions.
Since government broke the news of suspending PDS operations, the development has attracted mixed reactions from the Ghanaian populace, civil society and energy experts who have accused government of failing to do due diligence before undertaking the contract.
Former Chief Executive Officer of the Volta River Authority (VRA), Dr Charles Wereko-Brobby, in a reaction, insisted that an amount of $498.2 million which government was to access under the agreement to support transformation of the electricity sector was not significant money enough for it to gamble with a strategic national asset like the ECG.
“The government rushed to meet a deadline of the Second Millennium Challenge Corporation Compact and failed to do due diligence, and now we are trying to do the due diligence after the fact? We were forced to take the decision without necessarily satisfying certain preconditions,” he argued.
Dr Wereko-Brobbey held that the country had no excuse in dealing with the financial challenges plaguing the energy sector which remains pivotal in driving development and investment, given the fact that about $4 billion had been recently spent on banking sector clean-up.
He challenged government to see its current fall out with PDS as an opportunity to man up to its duties of addressing problems in the sector, particularly billing issues and continual indebtedness to Independent Power Distributors.
Meanwhile, PDS in a statement, had indicated that it had taken note of government’s decision, but would want to put on record that it had acted and would continue to act in good faith at all times.
The statement issued and signed by the Chief Executive Officer of PDS, Rev. William Hutton-Mensah, said the company would go through due process by complying with the terms of the transaction agreements executed between it and the ECG on one hand and the Government of Ghana (GoG) through the Ministry of Finance on the other.
“PDS also wishes to assure the Ghanaian public that it will not rush to put out any information until it has been sufficiently substantiated, in the interest of safeguarding the transaction and the image of Ghana,” it said.
Government on Tuesday suspended the concession agreement between Power Distribution Service (PDS) and the Electricity Company of Ghana (ECG) on one hand and the Government of Ghana (GoG) through the Ministry of Finance on the other, with immediate effect.
This was contained in a statement issued and signed by the Minister of Information, Kojo Oppong Nkrumah in Accra on Tuesday.
It said the suspension had become necessary due to some breaches in the company’s obligation in the provision of payment securities.
“The decision follows the detection of fundamental and material breaches of PDS obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence,” it said.
The statement explained that the Demand Guarantee were key prerequisites for the lease of assets on March 1, 2019 to secure the assets that were transferred in the concessionaire.
It said government was conducting a full enquiry into the matter, and the outcome would inform the next course of action, adding that “government has taken steps to ensure distribution, billing and payment services continue uninterrupted”.
The statement further assured the general public and customers that the development would not interfere with the distribution of electricity services to customers.