The Institute of Energy Security(IES) has stated that the delay in announcing the takeover of the Electricity Company of Ghana (ECG) by Power Distribution Services(PDS) is due to the refusal of PSD to provide a bond guarantee.
The Millennium Development Authority (MiDA) announced in January that PDS was scheduled to take over ECG on February 1, but the deal was postponed.
Speaking to Citi FM on the issue of ECG takeover, the Executive Secretary of the IES, Paa Kwesi Anamuah Sakyi disclosed that the refusal of PDS to provide a bond guarantee was the cause of the delay.
He maintained that PDS wants to first takeover the ECG before raising a bond with the assets of the ECG.
“We are getting the indication that Meralco(PDS) is asking to takeover ECG before they present their bank guarantee. In the arrangement, they need to put forward a performance bond that will guarantee the commitment that they have for ECG and the country and whichever part that will be fulfilled”.
He explained that “the performance bond or the bank guarantee is not ready and they (PDS) are seeking to takeover ECG and raise the bank guarantee on the back of ECG.
Mr. Anamuah Sakyi argued that “it is quite unfortunate because any other person can also do the same thing”.
“Why would you want to raise a bank guarantee on the back of ECG? We hope that is not the case. It is a very bad one because a bank guarantee is a condition that should be met before the takeover comes into being,” he stressed.
BACKGROUND
Millennium Development Authority (MiDA) awarded the operations, investment and management of ECG to Meralco Consortium in April last year following the completion of international competitive procurement process and evaluation of the proposals received for the ECG Concession.
The Meralco Consortium is led by the Manila Electricity Company of Philippines, which covers a third of the Philippines and serves a customer population in excess of six million.
Under the Power Compact II, six projects would be implemented to address the root causes of unavailability of power in some parts of the country.
The project comprised ECG Financial and Operational Turnaround Project, Northern Electricity Distribution Company (NEDCo) Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project and Access Project.
The rest are Power Generation Sector Improvement Project and Energy Efficiency and Demand Side Management Project, Social and Gender Integration, Environmental and Social Performance and Monitoring and Evaluation and Economics (M&EE).
The Government of Ghana signed the Power Compact II with the Millennium Challenge Account (MCC), an independent United States government agency on August 5, 2014.
Ghana would receive $498 million grant under the Compact to improve the performance of the country’s power sector, unlock the country’s economic potential, create jobs and reduce poverty.
