Two firms have submitted Proposals for the Concession for the Management of, Operation of, and Investment in the electrical distribution business of ECG, Millennium Development Authority, MiDA confirmed in a statement.

“As at the Proposal submission deadline of 4:00 pm today, MiDA received Proposals from the following Consortia - BXC Ghana and Manila Electric Company (MERALCO),” the statement said.

The ECG Private Sector Participation Activity is one of five Activities under the ECG Financial and Operational Turnaround Project of the Ghana Power Compact Programme.

MiDA opened the Proposals in the presence of the representatives of the Bidders.

The Proposals will be submitted to an independent evaluation panel composed of local and international experts. MiDA expects the Panel to complete evaluations of the Proposals by mid-April 2018.

Other milestones to be reached in the process by September 6, 2018 are: Negotiations with the Preferred Bidder, Cabinet Review and Recommendation of the Concession Agreement and Parliamentary Ratification of the Concession Agreement. 

French electricity conglomerate EDF, French transnational company Veolia and their local partner CH Group - who have put in a joint bid for the ECG Concession withdrew from the process at the last minute.

Concerns over local content policy

French electricity conglomerate EDF, French transnational company Veolia and their local partner CH Group rejected the government policy that allocates 51 percent mandatory ownership of the concession to Ghanaian companies.

In a letter dated February 12, 2018 and signed by Kevin Dadzie of CH Group, EDF and Veolia are protesting against the latest local content policy direction under the amended Request for Proposal (RFP), aimed at encouraging Ghanaian companies and entrepreneurs to be majority shareholders in the concession arrangement.

In the letter, addressed to CEO of Millennium Development Authority (MiDA) Enson Benjamin, and copied to the Board Chair Prof. Yaa Ntiamoa-Baidu, EDF and Veolia said: “We are writing on behalf of the consortium comprising CH Group Ltd, EDF and Veolia Africa, to express our significant concerns regarding the Newco [ECG] structuring requirements as set out in the amended Request for Proposals, dated 29 November 2017 (the ‘Amended RFP’).

The latest amendments under the amended RFP introduced mandatory 51 percent Ghanaian ownership – ultimate legal and beneficial ownership by Ghanaian citizens.

It puts express restrictions on creating different categories or classes of shares in NewCo; and the requirement for this 51 percent threshold is to be maintained for the concession’s full duration; a potential company event of default would trigger the default buy-out-option if this 51 percent threshold is not maintained.

According to the consortium, the above requirements significantly impact the consortium’s ability to structure a workable solution. The consortium further stated its financiers have cautioned that such restrictions will ultimately impact the concession’s bankability.

It further stated in the letter on page 3 that: “As part of the security package, which will necessarily compromise any financing package, the 51 percent restriction is again problematic; severely restricting the enforcement right of the lenders, and negatively impacting on bankability of the concession as a whole”.

Suicide note

Earlier, an energy expert who has been keenly following the deal noted that the stance being adopted by the French-led group is effectively a suicide-note, which is tantamount to self-exclusion from the bidding process.

“It is inexplicable why the group is seeking to withdraw from the process at this late stage, and one can only speculate that the vestiges of foreign domination and control of key infrastructure assets in developing countries or countries in transition could be at play,” the expert said.