Minister of Information Kojo Oppong-Nkrumah has revealed that the government came under intense pressure from Millenium Challenge Corporation (MCC) to reinstate the Power Distribution Services company despite adverse findings made against them in their failed takeover of ECG.
The Information Minister’s revelation comes after the US government through the MCC decided against disbursing some US$190 million as part of the Ghana Power Compact to revamp the country’s energy sector to make it more efficient.
PDS’ contract with the Electricity Company of Ghana was terminated after government ruled that the insurance guarantee it presented before the take over was fraught with irregularities prompting weeks of investigations.
The government upon the termination of the contract had made a plea to the MCC to allow a replacement to be selected by close of the year in order for the US$498 million Ghana Power Compact to proceed.
According to the Information Minister, throughout its engagement with the MCC, government came under intense pressure to reinstate PDS which was on suspension after the irregularities were discovered in July 2019.
Government, Mr. Oppong-Nkrumah stated, stood its grounds in a bid to ensure that it protects the interest of Ghanaians.
US government decision
The US government through its embassy here described government’s decision to cancel the PDS contract as “unwarranted”.
The Compact comprised of two tranches of funding; the first being US$308 million which was made available upon the official start of the current Compact, and the second tranche of $190 million, which was contingent on a successful concession agreement.
The agreement for a 20-year concession was approved on July 24, 2018, by Parliament leading to the private-sector participation in Ghana’s power distribution.
PDS is a consortium between Meralco, Angola-based firm Aenergia SA and three Ghanaian firms namely TG Energy Solution Ghana, GTS Engineering Ghana Ltd. and TBK Ghana Ltd.
Why the deal was terminated
PDS was in July 2019 found to have presented invalid insurance security for the takeover of ECG assets.
The company was initially supposed to furnish the ECG with payment securities in the form of either a demand guarantee or a letter of credit issued by a bank.
The insurance guarantee came about because of difficulties experienced with raising a bank guarantee.
PDS appealed to use a demand guarantee issued by an A-rated insurance company.
PDS thus submitted the Payment Securities in the form of demand guarantees issued by a Qatari insurance firm, Al Koot Insurance and Reinsurance, which eventually became the source fraud after it was discovered that there were fabricated letters and forged signatures.
The government also noted that Al Koot did not have the capacity to engage in such a transaction-based
on its net worth.
The company was also not authorized to issue demand guarantees.