Finance Minister, Ken Ofori-Atta says, the country would have lost billions of dollars if the government had not terminated the Power Distribution Company (PDS) agreement.
“If you look at the time frame and the nature of the contract we were to sign, we were to make payment of about a billion dollars every year and we would have paid about $12 billion even by 2023. This is why we had to sit back and take a proper look at the returns each of us was going to make so we know how much we will pay,” Mr. Ofori-Atta explained Friday on Peace FM.
“When contracts are unbalanced you have to balance them,” he stated.
“When we turned over our electricity distribution system to PDS on March 1, 2019, they had a demand guarantee of 350 million dollars to ensure that should there be any issue the country will have recourse to it. Unfortunately, the insurance company that got the demand guarantee said they will not handle that kind of instrument and flatly denied they had anything to do with the guarantee,” the Minister added.
He asked that “if you put your electricity distribution system into someone’s hands worth about $3 billion with about 20 to 25 years of concession and you realise within the first four months they don’t have enough money and their guarantees are not trustworthy, what is the responsible thing to do?”
The concession agreement with PDS was terminated on the instruction of the President, Nana Akufo-Addo in October 2019.
The termination brought to an end, PDS’ short-lived control of the country’s electricity supply.
The company was engaged in March but since its suspension on July 30, PDS had been embroiled in a corporate governance tussle among the shareholders.
A Ghanaian local consortium holds 51% of the shares while the remaining 49% shares are for two foreign companies, Manila Electric Company Limited (Meralco), a Filipino company with 30% shares and Aenergia, an Angolan company with 19%.
Foreign player, Meralco offloaded its shares to Meridian Power Ventures Ltd, a letter to a key transaction advisor, the US-backed Millenium Development Authority (MiDA) confirmed.
The opposition National Democratic Congress (NDC) sees the offloading of Meralco’s shares as evidence of clandestine attempts by the government to loot the assets of Electricity Company of Ghana taken over by PDS.
PDS was suspended after the government said it suspected the agreement was tainted with fraud.
Mr. Ofori-Atta in the interview confirmed the contract between PDS and the government was canceled due to some misapprehensions between the insurance companies of PDS.
According to the Minister, the insurance company denied signing a demand guarantee stating that it might be a rogue employee who signed the document, which clearly underlines the fact that there are no demand guarantees.