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Business News Thu, 24 Oct 2019

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Reverse cancellation of PDS deal – Alex Mould to Govt

The government of Ghana needs to reverse the termination of the PDS transaction agreement before the economy gets bigger hits than the GHS2bn of what Ghana just lost on the Power Compact alone, Alex Mould, former Chief Executive Officer for the Ghana National Petroleum Corporation (GNPC), has said.

The government of Ghana recently terminated the concession deal with PDS regarding the distribution of electricity in Ghana.

A letter dated 18 October 2019 signed by Mr Ofori-Atta, said: “Following consultations with Government, we wish to emphasise that Government remains strongly committed to the Compact and to private sector participation in the Electricity Company of Ghana.

“We also wish to reiterate the position communicated to the CEO of the MCC by the President of Ghana during their meeting on the sidelines of the United Nations General Assembly in New York on September 23rd to the effect that, the current concession had to be terminated in view of the facts uncovered regarding the failure by PDS to satisfy conditions precedent under the relevant transaction documents AND, however, that every effort would be employed to ensure a suitable replacement within the relevant timelines in order to complete the Compact.

“The Government decision to terminate the PDS concession and find a replacement in a timely manner to successfully conclude the Compact is based on two key points: First of all, it is Government’s view that the meeting between the CEO of MCC and the President of Ghana produced an understanding that the existing concession would be discontinued and a concession restoration and restructuring plan executed within existing timelines and in any event before December 31, 2019. It is worth recalling that following this understanding Mr Cairncross and President Akufo-Addo shook hands and committed to expeditiously putting the understandings into effect. Following the meeting, however, MCC sent an implementation plan, which in our opinion did not accurately reflect the outcome of the New York meeting.

“Secondly, the facts detailed below clearly justify the discontinuance of the current concession which, it should once again be emphasised, does not in any way diminish the Government of Ghana’s commitment to private sector participation in Ghana’s energy sector. Indeed, the Government intends to see this PSP through in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact”.

But Mr Mould said Ghana was likely to lose more than GHS10 billion if the country does not consider the lifeline given by the Millennium Challenge Corporation (MCC) as far as the Power Distribution Services (PDS) concession deal is concerned.

He explained that the problem with the PDS deal started in February 2019 when PDS could not come up with the needed bank guarantee just before the 1 March 2019 deadline, a situation, he said: “Surprises me, as the international player Meralco could easily get its banks in the Philippines to issue.”

In a Facebook post following the termination of the PDS deal by the government of Ghana and the consequential withdrawal of the $190 million funds allotted to Ghana by the MCC, Mr Mould said: “Why should Millennium Challenge Corporation (MCC) allow a grace period to reconduct a tender? They have been on this Compact for 5 years”.

“The goofing was identified in February 2019 when PDS could not come up with the bank guarantee just before the deadline of March 1st, which surprises me, as the international player Meralco, could easily get its banks in the Philippines to issue. So, why was it left to the local shareholders to raise the guarantees? – this was the 1st red flag”.

“Assets were handed over in March 2019 in a rushed manner where CPs were not met. Since April, there have been to and fro discussions with the MCC.

“Undue influence by people close to government brought us where we are. The audit was completed over 2 months ago and it was clear that Ghana was duped in handing over ECG assets mainly due to the lack of due diligence by the people in charge of the concessionaire privatisation. There is a Ghana government transaction team for which the president has appointed his own lawyer to chair – this team has the most power, even more than MiDA and ECG.”

Below is his full Facebook post below:

GHANA MAY LOSE MORE THAN GHS10bn IF WE DO NOT CONSIDER LIFELINE GIVEN BY MCC


Why should the Millennium Challenge Corporation (MCC) allow a grace period to reconduct a tender? They have been on this Compact for 5 years.

The goofing was identified in February 2019 when PDS could not come up with the Bank Guarantee just before the deadline of March 1st, which surprises me as the international player Meralco could easily get its banks in the Philippines to Issue. So, why was it left to the local shareholders to raise the guarantees? – This was the 1st red flag!

Assets were handed over in March 2019 in a rushed manner where CPs were not met. Since April there have been to and fro discussions with MCC.

Undue influence by people close to government brought us where we are.

The audit completed over 2 months ago and it was clear that Ghana was duped in handing over the ECG assets mainly due to lack of due diligence by the people in charge of the concessionaire privatization.

There is a Ghana Government Transaction team whom the president has appointed his own lawyer to chair – this team has the most power even more than MiDA and ECG.

There is MiDA that reports to the President. There is the IFC, the adviser to MCC and MiDA.

We are where we are because government failed to take the option proposed by MCC to keep PDS contract (ie to abode by sanity of contract’s doctrine) but change the Shareholding especially of the 51% Local players – who had no proof of competence either financial or technically (to have managed something similar in complexity and magnitude) – and replace them with Ghanaian Institutional shareholder in the interim with the ultimate aim at floating all or some of the shares on the stock exchange.

Government refused!! The question is Why??

Remember Meralco is the only reason that the contract for this ECG concessionaire was awarded to the PDS consortium based on their technical and financial clout which none of the other shareholders – including the recently added AEnergia SA, which still remains a mystery in terms of ownership and why at all it’s in the consortium – and there is no agent to get rid of them.

Let’s put the blame squarely on Ghana! Let’s call a spade a spade!!

We simply goofed on such a serious transaction!!!

This is a reflection of how seriously we take things in our beloved country Ghana – led by our *Leaders* in 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 shortchanging the Citizens of Ghana and to the detriment of our economy.

Please don’t blame MCC! The rules of engagement were clear! MCC is just asking us not to 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.

What we lose by cancelling the PDS contract and not working a solution with MCC is not just $190m but nearly $1.7bn

– $190m from the Ghana Power Compact

– $400m for the Regional Compact

– $500m Government Budgetary Support

– $580m from the concessionaire

Restructuring of shareholders is also amendable to MCC. Re-tendering the entire transaction is not.

The government needs to reverse the termination of the transaction (not shareholders) before our economy gets bigger hits than the GHS2bn of what we just lost on the Power Compact alone.

The real question is: “Is Ghana prepared to embarrass US Govt on the international scene??”

It is coming……..watch this space!!

Source: laudbusiness.com

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