UPDATE: Ghana to lose over US$1.8bn funding in U.S supported projects
Adnan Adams Mohammed
Unfortunately, Ghana is likely to lose close to US$2 billion
directly and indirectly from the United State of America government’s funded or
assisted projects starting this year for terminating the contract between the
Electricity Company of Ghana, (ECG)and the Power Distribution Service (PDS)
energy expert has said.
The U.S government through the Millennium Challenge
Corporation (MCC) announced their displeasure for the cancellation of the Power
Distribution Services (PDS) consortium under the concessionaire arrangement to
manage and maintain the southern sector electricity distribution in the country
last week.
This is partly confirmed by the Information Minister, Kojo
Oppong Nkrumah who said at a press conference, last week, that country is
likely to lose the Regional Compact Program, known as the “Compact 3” under the
Millennium Challenge Corporation (MCC) which is expected to allow Ghana to
facilitate the effective distribution of excess power to neighboring countries.
“There’s a possibility that the termination of the Power
Distribution Services (PDS) concessionaire agreement and annulment of the
second trench disbursement will affect the Compact 3 agreement and we are aware
of that possibility, but government will continue to engage the United States
government along with other matters tied to this concession agreement.”
This comes after the Government of Ghana officially
announced the cancellation of PDS agreement last week at a presser. This
returns the country’s over US$20 billion assets of the electricity distribution
channels back to its original manager, that is, Electricity Company of Ghana
(ECG).
In a breakdown analysis of the close to US$2 billion funding
support, Ghana is likely to lose from the
U.S, Mr. Alex Mould, former Ghana National Petroleum Corporation (GNPC)
and Executive Director with the Standard Chartered Bank gave an elaborative
analysis.
“What we lose by cancelling the PDS contract and not working
a solution with MCC is not just $190m but nearly $1.8bn. US $190m from the
Ghana Power Compact; US$400m for the Regional Compact; US $500 Government
Budgetary Support; US $580 from the concessionaire among others,” the renowned
energy said in a statement.
This should be a worry to all well intended government which
mean well for its citizens in advancing socio-economic development and
attracting investors, to reconsider its decision.
The MCC, which is the financier of the Ghana Millennium
Challenge Compact II (Power Compact), is telling the government of Ghana to
reverse back the terminated PDS concession and restructure the consortium to
ensure friendly investment climate for the lead concessionaire (Meralco) to
operate.
MCC is just demanding that government through its
transaction advisor to: keep the PDS contracts; change the undesired Local
shareholder and replace them with institutions like SSNIT and or Ghana
Infrastructure and Financing Fund (GIFF); bring in known world class foreign
distribution companies (Meralco has been approved) and eliminate AEnergia SA,
Mr Mould said.
“We simply goofed on such a serious transaction!!! This is a
reflection of how serious we take things in our beloved country Ghana - led by
our leaders whom we have placed so much Trust to do the right things;
“The focus is not Ghana First, but rather what “We” get from
managing the assets of the state which normally results in short changing the
Citizens of Ghana and to the detriment of our economy;
“Please don’t blame MCC, the rules of engagement were clear.
MCC are just asking us to not take us back years.
“Let’s consider the option and lifeline given by MCC: - keep
the PDS contracts, - change the undesired Local shareholder and replace them
with institutions like SSNIT and or GIFF, - bring in known world class foreign
distribution companies (Meralco has been approved) and eliminate AEnergia SA,
the scarlet pimpernel in this deal”
A termination brings 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 the 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%.
However, Meralco offloaded its shares to Meridian Power
Ventures Ltd in recent development about the PDS consortium brouhaha, a letter
to a key transaction advisor, the US-backed Millenium Development Authority
(MiDA) confirmed.
Apparently, the Minority in Parliament characterised the
offloading of Meralco’s shares as evidence of clandestine attempts by the
government to loot the assets of Electricity Company of Ghana by family and
friends as almost all of the owners and board members of the local companies in
the PDS consortium are one way or the other related people in government.
PDS was suspended after the government said it suspected the
agreement was tainted with fraud. This led to the transaction advisor, MiDA,
setting up an investigative body into the allegations but cleared PDS of any
wrongdoing in its report.
In 2014, as part of the conditions that government needed to
satisfy in order access a second Millennium Challenge Compact, named as the
‘Ghana Power Compact’(thus, bringing in private participation in the management
of Ghana’s power distribution). The Compact II was to see Ghana receive
US$498.2 million from the Millennium Challenge Corporation of the United States
to advance economic growth and reduce poverty in Ghana.
The Power Compact was to, “directly support the energy
sector strategic objectives to achieve power supply sufficiency including
exports to neighbouring countries, and also supply power for new oil and
gas-based industries.”
The then president John Mahama government announced the decision
to, as part of the Compact II agreement, enter into a concessional agreement
where a private company would take over the management of the largest power
distributor in the southern part of the country, the Electricity Company of
Ghana. The announcement was however met with resistance despite strenuous
clarification and explanation by the government that the strategic national
asset was being privatized. The workers of ECG held several public fora and
protested the decision, arguing that if the government paid its debts to the
power distributor and made the necessary investments, the company was capable
paying its supplies and proving viable.
To ensure start the process, invitations were made for
companies wishing to participate in the management of ECG to come forward. In
September 2016, the Chief Executive of MiDA, Ing. Owura Kwaku Sarfo announced
that out of the over 60 companies that expressed interest in the Private Sector
Participation in ECG), MiDA had shortlisted six, out of which one would eventually
be selected as the concessionaire.
Two of the six companies were consortiums, with the other
four bidding individually.
The companies are Manila Electric Company from the
Philippines; Ch Group/Edf Sa/Lmi Holdings/Veolia Sa with Ghanaian address; EngieEnergie
Services, SA; from France, Bxc Company Ghana Ltd /Xiaocheng Technology Stock
Company Limited, registered and operating in Ghana; EnelS.P.A.from Italy; and
Tata Power Company Limited from India.
In a document titled ‘Concession for the management of,
operation of, and investments in the electricity distribution business of the
Electricity Company of Ghana, Pre-qualification of applicants and release of
RFP,’ request for proposals were issued to the shortlisted companies on
Tuesday, August 30.
Following the change in government in January 2017, the new
government announced it had negotiated an amendment of the shareholding
structure to ensure that Ghanaians hold the majority stake in the company. Then
Energy Minister BoakyeAgyarko said the government wanted 51 percent of the
shares to be held by Ghanaian citizens.
Unhappy with this state of affairs, some of the companies
withdrew from the process leaving only two - Consortia - BXC Ghana and Manila
Electric Company (MERALCO) from the Philippines, to submit their proposals for
the management of ECG.
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