The Electricity Company of Ghana Limited (ECG) has assumed full operational and financial control of the electricity distribution business in the Southern Zone of Ghana with immediate effect, following government’s termination of its concession agreement with Power Distribution Services (PDS) on claims of fraud.
Amid the outcry over the botched concession agreement between ECG and PDS, the Government of Ghana at a presser, Wednesday, stated clearly that it can’t compromise on the termination of the agreement which will cost the country US$190 million.
“The Ghanaian and American sides regret that we could not find a mutually agreeable path to have concluded the utilization of the full US$498 million. On the Ghana side, we are not able to compromise because we are advised and believe same to be true, that the concessionaire failed as initially suspected to meet a material and fundamental term of the concession agreement which was to deliver and maintain valid payment securities for the transfer of assets.
“The two sides were not able to agree on a common path to resolve this point. The Government of Ghana consequently from 9am this morning commenced the processes to terminate. The necessary documentations are being filed with PDS and the Energy Commission at the moment. It is expected that residual matters between EC and PDS will be resolved with dispatch. The Government of Ghana and the US Government will continue to work together on other development cooperation projects,” Minister of Information, Kojo Oppong Nkrumah said.
Ghanaweb.com takes you back to a publication by Pulse.com.gh after PDS secured license to take over assets and operations of ECG. The said publication was based on a statement Energy Minister, John Peter Amewu made.
Make profit or we will take over the management of ECG – Energy Minister tells new power managers
Ghana’s Energy Minister John Peter Amewu has said that the government will reassume the operations of the Electricity Company of Ghana (ECG) if the new managers, Power Distribution Services (PDS) fail to meet their key performance indicators.
He was speaking at the handing over ceremony in Accra.
PDS is taking over the management and operations of the ECG after Meralco consortium, a major shareholder in PDS won a bid to manage the ECG.
Mr Amewu said the government will monitor the operations of PDS closely to ensure performance delivery.
“I wish to ensure the concessionaire, PDS that I am going to keep my eagle eye on the key performance indicators set out on the transaction agreement, and for some reason all those challenges enumerated above on any single occasion during the that you are expected to deliver effective service will come undone, an exit to the door will clearly be an option.”
As part of their KPIs, Mr Amewu said PDS is expected to improve the operations of ECG and return the company to profit in a short period.
PDS has taken over Ghana’s power supply operations for $91 million. This means that PDS will be the new owners and directors of the company.
The distribution by the PDS will commence in the Southern Distribution Zone of Ghana.
The PDS will also be expected to improve revenue collection, cut cost, and maintain stable power for two decades while injecting over 500 million dollars into the power distributor.
Meanwhile, the Finance Minister Ken Ofori-Atta said was hopeful the government subvention in ECG will gradually reduce.
“We expect that this agreement will slowly remove the government support for ECG to make the company strong enough to stand on its own”.
On his part, the Vice President of Meralco Philippines, Ireneo Acuna said that the revision of shares from 20 percent local participation to 51 percent is a laudable initiative taken by the Nana Addo government.
“When the second bidding conference was done and the government said they want to increase the local participants, we were the only company that was excited because we believe in that,” Mr. Acuna said.
PDS is a consortium of Ghanaian and two foreign companies. The Ghanaian component consists of TG Energy Solutions with 28 percent shares, Santa Power Ltd with 13 percent shares, and GTS Power with 10 percent shares. The others are Manila Electricity Company with 30 percent shares from the Philippines shares and Aenergia from Angola with 19.