Terminating PDS deal was in Ghana’s best interest, says Information Minister Featured

By Isabella Agyakwa October 24, 2019 4010 552 comments

The Akufo-Addo government has confirmed that it is still interested in private sector participation (PSP) in the Electricity Company of Ghana (ECG) turnaround programme, despite the termination of the ECG’s concession agreement with Power Distribution Services (PDS).

It is therefore expected that on the return of the Minister of Finance, Ken Ofori-Atta, from the 2019 Annual Meetings of the International Monetary Fund (IMF) and World Bank in Washington DC, he will outline the government’s plans for private sector participation in the energy sector.

“Yes, government is still interested in private sector participation and in the coming days, the Minister of Finance will be outlining how we intend to achieve private sector participation in the ECG turnaround programme,” the Information Minister, Kojo Oppong Nkrumah, made this known to journalists at a media interaction yesterday in Accra.

Termination

The government, late last week, announced its intention to terminate the ECG’s concession agreement with PDS, after earlier raising questions about the validity of the demand guarantee used by PDS as a security for the transfer of the assets of ECG into its custody.

The termination decision followed a meeting between secretary to the President, Nana Bediatuo Asante, and Mr Ofori-Atta on one hand, and the principal deputy vice-president of the Millennium Challenge Corporation (MCC), Kyeh Kim, and the resident country director-Ghana of the MCC, Kenneth Miller, on the other hand, held in Washington DC on Friday.

The Information Minister disclosed that both the Ghanaian and American governments came to a conclusion on the resolution of residual matters of the Compact II agreement.

The American government felt there was nothing wrong with the PDS deal, and so there was no need for the termination of the concession agreement.

But the Ghana government elected to terminate the concession agreement with PDS, which was selected concessionaire for the private sector participation in the ECG turnaround programme.

ECG announced yesterday that it has resumed full control of all the operations of the company, and urged its customers to have nothing to do with PDS.

Outcomes

In return, the Information Minister said, the US side has de-obligated to make available the outstanding $190 million in the entire $498 million Compact.

Both sides, he said, regretted that they could not find a mutually agreeable path to conclude the utilization of the full $498 million.

“On the Ghana side, we are not able to compromise because we advised, and we believe same to be true, that the concessionaire failed, as initially suspected, to meet a material and fundamental term of the concession agreement, which was to deliver and maintain valid payment securities for the transfer of assets,” the Minister pointed out.

Serving Ghana

According to Mr Oppong Nkrumah, the Akufo-Addo led government believes that any transaction of this kind should be structured to give Ghanaians and Ghana a significant share.

That, he said, resulted in the current government lifting Ghana’s share from 20 to 51 per cent.

“The decision that the government has had to take, as difficult as it is, despite the significant international pressure, is necessary, in our view, 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 Ghana. He has done exactly that, despite the pressure,” he said.

He further said that the $308 million, which has already been secured, will be utilised to improve the operations of the ECG.

In addition, he said, since no jobs were lost in the transfer process, and no jobs will be lost in the termination process, government will remain committed and ensure that there will be no interruptions in power supply.

“Dumsor is a thing of the past. We also do not expect interruptions in power supply as a result of this decision,” he said.

Commendation

Also speaking at the press conference, a Deputy Energy Minister, William Owuraku Aidoo, said President Akufo-Addo and the government should be lauded for protecting Ghana’s interest.

"It is a commendable move by the government, notwithstanding the pressure that was brought to bear. This is not the first time this government has taken a very bold step, without capitulating to the big friends like the United States of America,” he said.

The Millennium Challenge Compact (the Compact) was signed on August 4 2014 between the MCC, acting on behalf of the Government of the United States, and the Government of Ghana, acting through the Finance Minister.

A key condition under the private sector arrangement was to introduce a concessionaire into the power distribution sector, who would inject private capital into the operations of the Electricity Company of Ghana.

The two key advisors to the managers of the Compact, the Millennium Development Authority (MiDA), were the International Finance Corporation (IFC) and Hunton and Williams, an international law firm based in New York.

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