Ghana, MCC agree December 31 deadline for new power concession

Ghana, MCC agree December 31 deadline for new power concession
Source: Ghana | Myjoyonline.com | George Nyavor | george.nyavor@myjoyonline.com
Date: 20-10-2019 Time: 10:10:00:am
The new concessionaires will manage the assets of state-owned power distributor, ECG

The Ghana government and the Millennium Challenge Corporation (MCC) have agreed on a December 31 deadline for the establishment of a new power concession.

This revelation follows the termination of the concessionaire agreement between Ghana government and Power Distribution Services Ltd (PDS) on Saturday, October 19, 2019.

In a letter explaining the reasons behind the termination of the controversy-ridden contract, the Finance Ministry revealed that there has been a meeting between the CEO of MCC, Sean Cairncros and President Addo Dankwa Akufo-Addo in New York with an understanding that a new concession will be executed “within existing timelines and in any event before December 31, 2019.”

“It is worth recalling that following this understanding, Mr Cairncross and President Akufo-Addo shook hands and committed to expeditiously putting the understandings into effect,” the letter signed by the Finance Minister, Ken Ofori-Atta, stated.

Related: Engage NDC on PDS deal to end controversy – Kweku Baako advises gov’t

The government said it is committed to seeing through a Private Sector Participation (PSP) “in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact.”

While stressing Ghana government’s desire to ensure private participation in the power distribution sector, Mr Ofori Atta also underscored the need for transparency in the procurement process.

“Whilst recognising the prerogative of the MCC in the determination of a particular procurement method in the selection of a PSP, in view of the limited time (approximately two years) until the expiration of the Compact II Program, Ghana hereby recommends the adoption by the MCC/MiDA of a restricted tender process to replace PDS. This restricted tender process shall be undertaken timeously by fast-tracking some of the processes without compromising the integrity and transparency of the procurement processes,” the letter, explained.

Compact II

The US would pump some half-billion dollars into Ghana’s energy sector under the Compact II Programme which requires Ghana to allow private sector participation in the energy sector.

PDS was chosen to perform this role until the government suspended and subsequently terminated the agreement with the company following controversies surrounding the demand guarantee it submitted to Ghana before taking over the assets of the Electricity Company of Ghana.

The government said the controversies that hit the PDS deal do not diminish its commitment to allowing private sector participation in the energy sector.

Controversy

A planned restructuring of the PDS shareholding renewed opposition to the concessionaire agreement, with the opposition National Democratic Congress (NDC) accusing the Akufo-Addo-led administration of scheming to plunder the assets of the Electricity Company of Ghana (ECG) – estimated at around GHS18 billion.

Earlier, there had been allegations of fraud in the takeover of ECG by PDS, however, a forensic audit stated that the claims were unfounded.


The forensic report stated that the entities involved in the PDS concession did not conspire to commit fraud against the state as earlier suspected by the government.

The government on July 30 announced the suspension of the contract with PDS, barely six months after the company took over from ECG.

The decision, according to Information Minister, Kojo Oppong Nkrumah, “…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 diligence. The Demand Guarantees were key prerequisites for the lease of assets on March 1, 2019, to secure the assets that were transferred to the concessionaire.”

Subsequently, MiDA hired the services of an independent investigator, FIT Consulting, on August 16, to conduct forensic audit over the alleged fraudulent guarantee documents submitted.

Documents revealed that the private auditor hired by the Millennium Development Authority (MiDA), did not find any information to suggest that either PDS, Cal Bank, Donewell and or personnel from MiDA committed or conspired to commit fraud or other malfeasance in relation to the demand guarantees.

Read the Finance Minister’s letter on the termination of the PDS contract below.