Suspension of PDS; a test case for Ghana beyond aid

Fri, 25 Oct 2019 Source: Ruth Aboagye

The decision by the government to cancel the PDS deal should be a test case for government’s agenda of Ghana beyond aid.

The Citizen Watch, one of the leading think tank groups in the country has hailed the Akufo Addo’s administration for the bold decision to cancel the deal between the Electricity Company of Ghana, (ECG) and Power Distribution Service (PDS), as it has been alleged that the United State government was using a third party company to front for other external companies to force just their way through.

For the government to call it off means there is an opportunity to raise US$200million from the local market or partners, more especially as the country is in the era of Ghana beyond aid.

In a statement issued in Accra and signed by Francis Mensah, the Convener of the group said, the government needs to establish a special purpose vehicle to help raise this US$200 million to support the said operations of ECG.

According to the Citizen Watch, “every business has liability and asset..ECG’s liability is huge, what is the asset base, the asset base is also huge. What the government needs to do is to establish ECG holdings to secure the assets of ECG.

The ECG holdings would now have an opportunity to lease it devices and resources to other external service providers or outsourcing it to both local and international service providers such as the billing, installations, maintenance, fraud detection and revenue assurance, customer relation and interaction and power purchase. Through these the ECG holdings would be making some money to meet it maintenance cost. Even at ground zero the holding company could have recovered their cost” it said. MTN has been making big revenues in Ghana but its operations are run by Ghanaian services providers and employees.

“PDS should not have been a single company running this business from the word go. It could have been five companies running ECG and that was where the woes of ECG begun”, the statement said.

“The NDC and NPP were scared of the neo colonial master. For the NPP government to cancel the deal shows some boldness. The US$190 million is no money, lets spread it among Ghanaians and what does it take to get there”, the statement said.

The Government of Ghana has terminated the Concession Agreement with the Power Distribution Services (PDS) Limited over the take-over of the assets of the Electricity Company of Ghana (ECG) for distribution of electricity in the southern sector of the country.

The move was necessitated by a forensic audit conducted by the Millennium Challenge Corporation (MCC) and Government of Ghana's investigations into the issuance of Demand Guarantees for the Concession Transaction, which revealed that the Payment Security for the Transaction was invalid.

The investigations re-affirmed the earlier report that, there was no approval by Competent Signatories to the Demand Guarantees issued by Al-Koot in Qatar, therefore, the Transaction lacked the required authorisation and approval of the Company.

More so Al-Koot has an underwriting policy and guidelines which required the approval of the Central Bank of Qatar, but no such approval was granted by the Central Bank of Qatar.

In view of that, President Nana Akufo-Addo and Chief Executive Officer of the MCC, Mr Caircross agreed that the existing Concession between PDS and ECG, which involved the transfer of the latter's assets worth three billion dollars should be discontinued, while a suitable replacement was sought before December 31,2019.

Columnist: Ruth Aboagye