Expert questions ECG and PDS deal
Adnan Adams Mohammed
Following the fall out of the Power Distribution Services (PDS) take-over of the Electricity Company of Ghana (ECG) many Ghanaians including energy and financial experts have had a bite on the issue with many condemning the process and composition of the joint venture, PDS.
The Millennium Development Authority (MiDA), the implementing agency and supervisor of the power compact, has said contrary to the public allegations, each step of the ECG PSP transaction process, prior to the handover of ECG’s distribution business and assets to PDS, was subjected to careful scrutiny and various stakeholder approvals. This was contained in a statement it released last week.
“In line with best practice in International Business Transactions, all documents submitted as part of the transaction were accepted on the basis of good faith and the presumption in law as to their validity,” MiDA said.
But, Mr Alex Mould who was also skeptical about the whole process and agreement has explained the process and has raised some mind boggling questions.
He explains that, it was a lease and assign agreement for the Bulk Supply in connection with sale of Capacity and Net Electrical Output for a term of 20 years – yes, not a sale; it is also an agency agreement to administer the portfolio of Power Purchase Agreements.
PDS will get from Energy Commission a distribution license and a rental sale license.ECG sells capacity and Net electrical output (NEO) to PDS. The company (PDS) is obliged to buy the capacity and NEO – an exclusive right.
The Form of Demand Guarantee in the signed Bulk Supply Agreement as stated in Annex 1 of Schedule 4 states it will be a Bank Guarantee which needs to be posted to ECG.
The Bank Guarantee was contingent on coming out with new tariffs based on an agreed tariff methodology. But, PURC delayed the announcement of new tariffs so no bank was willing to grant the guarantee.
So PDS approached the conditions precedent committee proposing an A-rated insurance company. This was referred to the ECG board that approved it.
The questions follow: “On the Guarantees;
What was the role of CAL Bank in issuing the insurance, and does CAL Bank play any other role with PDS?
Who was the insurance company that initially issued the Guarantee? What is the net worth of the issuing insurance company?
What role did Jo Australia and Al-koot play?
On the shareholders, who are the shareholders of Meridian? Where are Meridian shareholders registered?
Do we really know the beneficial ownership of all the shareholders of PDS?”
The government has suspended the concession agreement with Power Distribution Services (PDS), bringing back the Electricity Company of Ghana (ECG) to be in full control of power distribution.
According to Information Minister, Kojo Oppong Nkrumah, the decision was taken after government detected “fundamental and material breaches of PDS’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which has been discovered upon further due diligence.”
He said government wants to secure ECG’s assets that were handed to PDS as part of the concession agreement.
“While the current development is an unfortunate setback to the progress of the Concession, MiDA wishes to assure the public that it welcomes investigations into this matter,” it said.
MiDA also assured Ghanaians that it will continue to work transparently and with a high level of integrity to achieve results in the best interest of Ghana in order to sustain the goodwill and prospects our country derives from the implementation of the Millennium Challenge Account Program.
MiDA advised the public to be circumspect in drawing conclusions not supported by facts and evidence while investigations are ongoing.