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BXC’s suit against ECG may cost Ghana US$500 million– experts

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Adnan Adams Mohammed

Energy experts have warned that Ghana could lose out on the almost US$500million ECG privatization package under the Power Compact II agreement.

This comes after one of the concessionaires that bid to manage ECG, BXC Consortium sued the Millennium Development Authority (MiDA) over what it described as an unfair treatment in the bidding process.

MIDA last week disqualified BXC Consortium and selected Meralco Consortium, a company led by Manila Electricity Company from the Philippines, to manage the Electricity Company of Ghana [ECG], under the Power Compact II agreement.

In a letter dated April 12, 2018, the Chief Executive Officer of MiDA, Martin Eson-Benjamin, explained that BXC Consortium was disqualified because the company has “one or more conflicts of interest”, and, therefore, cannot continue with the bidding process.

Per the compact, the Millennium Challenge Corporation is expected to inject about $418 million into ECG, while Meralco will invest about $500 million.

However, a former Deputy Power Minister, John Jinapor has said the suit by BXC Consortium could throw the whole concession programme out of gear.

“It is important we quickly find a solution, conclusion and finality to this hydra-headed problem,” he said.

He added: “This [suit] could throw the whole concession programme in disarray, so it is a very major concern, needing us to come to a conclusion to deal with this matter as soon possible.”

Chinese multinational company, BXC Consortium interested in the privatization and management of Electricity Company of Ghana (ECG) under the Millennium Development Authority (MiDA), is in court over the bizarre circumstances, under which the company was disqualified during the bid.

BXC Consortium through its lawyers, among other things, demands an injunction on the ongoing ECG privatization, until a determination on the fairness or otherwise of the whole process.

Documents sighted by this newspaper, regarding the decision by MiDA to disqualify BXC Ghana Limited, and subsequently award the concession to a Filipino company; Meralco Consortium, is turning out to be another embarrassing scandal about to dent Ghana’s image internationally.

Indications are also that the Chinese, will be heading for an international arbitration, should the Ghanaian courts fail them.

In one letter dated April 12, 2018, the Chief Executive Officer (CEO) of MiDA, Martin Eson-Benjamin, stated that, the basis for disqualifying BXC Consortium is because the company has “One or more conflicts of interest or potential conflicts of interest”, and therefore cannot continue with the bidding process towards the management, operation and investments in the electricity distribution business.

But BXC Ghana Limited, insists that, MiDA’s reasons for disqualifying BXC Consortium, is completely flawed and baseless as evidence emerging suggests to them that, the purported disqualification was solely done to favour the other competitor; Meralco Consortium.

This paper gathered that, BXC, ahead of their bid, had declared all their previous and existing contracts with ECG to MiDA, hence cannot be accused of withholding information or conflict of interest.

Legal experts familiar with the development have said that, BXC contracts with ECG, did not in any way or form, create any actual or potential conflict of interest situation relative to the ECG Concession, especially so, when MiDA, has always been aware of these facts.

Indeed, documentary evidence reveal that, based on the information provided to MiDA, they subsequently selected BXC as pre-qualified bidders, and based on that information, MiDA, handed BXC a Pre-Qualification Submission Letter, thus suggesting BXC, can continue to participate in the bid.

BXC in a letter dated March 1, 2018, had informed MiDA that, it has worked in Ghana since 2005 and executed projects for ECG since 2012.

It described these projects as mini-concessions, adding “our experience in that vein is unmatched on the Ghanaian landscape and would be extremely useful in the successful management of this concession”.

The company also informed MiDA that, they had the benefit of working seamlessly with Ghanaians for 13 years; a factor BXC believe would stand them in good stead, adding “within this period, the company has pre-financed and successfully completed, inter alia, a US$30,000,000, Solar IPP Project in Mankoadze, a US$40,000,000.00 Rural Electrification Project, a US$11,000,000.00 Boundary Metering Project”.

In addition, BXC, also informed MiDA about an ongoing US$170 million pre-financed Losses Reduction ECG Project, as well as a US$650 million Thermal Power Generating Plant in Takoradi in the Western Region.

It, therefore, baffles the Chinese company, that MiDA, instead of using this information to the advantage of BXC, rather used it to disqualify them on the basis of Conflict of Interest.

The legal experts have explained that, per the above revelation, MiDA’s purported disqualification of BXC from the tender process based on the said contracts with ECG is without any merit, because there is no legitimate ground warranting the exclusion of BXC’s consortium from the tender process.

The actions by MiDA, according to the experts, could be described as a reckless abuse of power because the conflict of interest situation is nonexistent.

Meanwhile, the paper also gathered that BXC, has so far spent in excess of whopping US$2 million over the past two years in preparing the bid documents, hence its disqualification from the tendering process has caused the company huge financial loss.

Several documents sighted detail several attempts by BXC to get MiDA to give them a hearing and reconsider its decision, but this proved futile. MiDA, despite receiving the said letters, remained adamant.

The MiDA boss in response to one of the many letters to his outfit, wrote a rather interesting letter to the Managing Director of BXC Company (Ghana) Limited, one Guang Wen Wu.

The letter entitled: “Re: ECG PSP Transaction. It read: We acknowledge receipt of your Letter dated April 13, 2013, on the above-mentioned subject. MiDA will revert to you in due course”.

Interestingly, the management of BXC was to be made aware that MiDA, has rather awarded the concession to Meralco Consortium, through media outlets.

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