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These are the major reasons gov’t has suspended PDS

31/07/2019
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Government of Ghana on July 30, 2019 suspended the concession agreement with Power Distribution Services, PDS.

A statement from the Ministry of Information said the decision was taken after government discovered some breaches in the company’s obligation in the provision of Payment Securities.

 According to Information Minister, Kojo Oppong Nkrumah, the decision was taken after government detected “fundamental and material breaches of PDS’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence.”

However, according to Ghana talks business sources in the energy sector, PDS since it took over from ECG, was not meeting Ghana’s power sector goals, a situation which nearly destabilize the whole energy sector and resulted in the rise in cost of power.

Also, the Ghanaian partnership in Meralco Consortium – owners of PDS never had the technical expertise and financial capacity in the energy sector to manage ECG.

More so, local shareholders, TG Energy Solutions Ghana, which had 18% shares in PDS making it the largest Ghanaian shareholder in the transaction, has a questionable record as far as the energy sector is concerned.

The source added that, at the time of filing documents before the agreement was signed, TG Energy Solutions, largest Ghanaian shareholder had no office or physical location as per the documents presented to the committee by the Millennium Development Authority (MiDA).

Another critical issue, according to our source are some major infractions in relation to some critical clauses in the Agreement. For example, Section 2.23(g) of the Agreement states that “Without limiting the rights of ECG pursuant to this Section 2.23, ECG and the Company shall, prior to the Transfer Date, jointly prepare an ECG monitoring schedule and protocol consistent with this Section 2.23”,

This clause which is key to ensure that the assets of ECG are monitored during the concession period was breached. As such since PDS took over the concessioner, ECG has not be in a position to ensure that its assets are well managed and maintained by PDS.

Therefore, with the information given by our source, it’s not surprising the Information Ministry, Kojo Oppong Nkrumah in an interview with Accra based radio station Joy FM on July 30, 2019,  stated that “We have through deep intelligence detected that they have issues with those guarantees that were provided. They were not valid and we have taken the step to secure the assets of the state by suspending the concession agreement,” 

Our sources revealed that following the transfer of ECG’s assets and operations to PDS on the 1st of March, 2019, ECG, acting as the beneficiary of the Demand Guarantees, has subjected the Guarantees submitted by PDS to further due diligence tests.

ECG received a letter from Al Koot, dated 16 July 2019 that claims, among other things, that the officer who executed the Guarantees from Al Koot was not authorized and that the Guarantees are null and void. The letter also stated that the officer had committed fraud.

Insider information further revealed that the alarming development resulted in meetings with officials of Ministry of Finance and ECG as well as with President Akufo-Addo.

After the meetings Government decided to crosscheck the information contained in the Disclaimer Letter by sending a Delegation of Stakeholders to Doha, Qatar, who are set to fly today Wednesday, 31st July 2019 to meet with officials from Al Koot.

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