Business News Mon, 28 Oct 2019

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IMANI backs govt over PDS deal termination

Policy think tank IMANI Ghana has backed the Ghanaian government’s decision to terminate the power concession of Power Distribution Services (PDS).

It has also expressed disagreement with the position of the Government of the United States that contract sanctity should be the primary concern in the ongoing PDS power concession termination brouhaha.

The Government of Ghana last week announced the termination of PDS contract months after it claimed that it had detected breaches in the PDS deal.

The termination decision follows a meeting between the Secretary to President Akufo-Addo, Nana Bediatuo Asante, and Mr. Ken Ofori-Atta on one hand, and the Principal Deputy Vice-President of Millennium Challenge Corporation (MCC), Kyeh Kim, and the Resident Country Director-Ghana of the MCC, Kenneth Miller, on the other hand, held in Washington DC on Friday, October 18, 2019.

After the Ghanaian government took the decision to terminate the contract, the US government de-obligated to provide the remaining $190 million to ensure the full utilisation of the total sum of $498 million for the Compact II.

Critics have chastised government for not acting in the best interest of Ghana in the negotiation, and signing of the power concession.

Some have also complained that the decision of the Akufo-Addo government has led to Ghana losing the $190 million.

But in a statement, IMANI said the $190 million MCC money supposedly lost as a result of the PDS termination was not free money for Ghana to spend as it pleases.

According to the statement, the money was meant for investment into the electricity grid under a particular regime.

Search for New Partners

IMANI explained in the statement that with the termination of the extant arrangement, Ghana simply needs to find other partners willing to invest substantial resources in the grid.

It said the problem was that the current PDS group has no capacity to invest the $650 million needed to ensure appreciable improvements to quality of service and loss minimization in the electricity distribution system.

“So what is the point of $190 million when the bulk of investment resources required remain inaccessible?” it quizzed.

It stressed that what is required at this stage is a strategic partner with the muscle to invest roughly $650 million to truly modernise the grid, maybe even more (estimates differ).

“Staying with PDS in the hope of securing $190 million from the US-controlled MCC does not help us achieve that goal,” it added.


However, IMANI faulted the Ghanaian government for the processes that led to the formation of PDS after Meralco had won the tender, claiming that “the process was opaque, poorly thought through and badly regulated/governed.”

The statement added that “if we wanted 51% local participation in the Special Purpose Vehicle (SPV) set up to manage the concession, we should have ensured a quality, transparent and well thought through process subsequent to the international competitive tender.”

Source: dailyguidenetwork.com

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