A former Chief Executive Officer (CEO) of the Ghana National Petroleum Corporation (GNPC) and energy expert, Mr Alex Mould has accused government of complicity in the Power Distribution Services (PDS) deal.
In a statement reacting to the report released by FTI Consulting, a United States-based consulting firm commissioned by the Millennium Development Authority (MiDA) which investigated whether or not Power Distribution Services (PDS) Ltd duly won the contract to manage the assets of the Electricity Company of Ghana (ECG), Mr Mould said government knew shareholders of PDS did not have the wherewithal to raise the funds for the guarantee.
According to him, PDS shareholders were allowed to “cannibalize funds from operations (cash flow for all the power service providers) to meet their obligation to fulfil the raising of the guarantee condition which was to precede takeover of the assets of ECG.”
“This shows that government - MiDA, ECG, its sector ministry (Ministry of Energy and Ministry of Finance) was complicit in the perpetuation of this high-level act of deception. And we are all either ignorant, clueless or just plain dumb and dull-witted!!!
Read Full Statement
We are back on the PDS issue!!
It would be interesting to see the balance sheet and income statement of PDS as at the time the payments were made.
If PDS used the operating revenue (tariffs collected on behalf of all power service providers) to make these payments, then it supports the fact that MiDA and ECG knew that the shareholders did not have the wherewithal to raise the funds for the guarantee.
And, that was the reason in making it a continuing condition rather than a precedent one before the handover of ECG’s assets to PDS.
Once the assets were handed over, the PDS management could now use the operations cash flow (cashflow for all the power service providers).
This then became fungible with shareholders funds to fund obligations that were meant to be paid for from shareholders funds; injected from the onset into the Company PDS before handover of the ECG assets.
Please note that PDS was to make the guarantee fee payments from their equity (shareholders funds) but it looks like they used operating funds and made a mockery of the whole objective.
So in summary, PDS shareholders did not need to raise their own funds to show financial wherewithal. Rather, they could cannibalize funds from operations to meet the shareholders' obligation to fulfil the raising of the guarantee condition which was to precede takeover of the assets of ECG.
The fact that we allowed a change from a bank guarantee to an insurance guarantee in itself was a smelling herring.
This is because the latter would not require as much due diligence as the former; due to the difference in type of guarantee.
This shows that Government - MiDA, ECG, it’s sector ministry MoE and MoF - was complicit in the perpetuation of this high-level act of deception.
And we are all either ignorant, clueless or just plain dumb and dull-witted!!!