Government cancels PDS contract

The Government of Ghana has canceled its contract with the Power Distribution Services (PDS).

The PDS was suspended after government said it suspected that the agreement was tainted with fraud.

The transaction advisor Millennium Development Authority(MiDA) set up an investigative body into the allegations and cleared PDS of fraud.

In spite of the clearance in August, PDS remains suspended and government has now taken a decision to cancel the agreement.

“The position of PDS as a PSP in the private sector enterprise which constitutes the driving factor for the compact has become untenable. It is our respective view Government of the United States of America should be seriously concerned with the lack of security for a transaction involving the commitment of funds of the American people as colossal as the amount in question as well as the general unethical and unprofessional conduct of PDS. ECG and the Government of Ghana have no option but to terminate the LAA and BSA as well as the GSA respectively dated 3rd July 2018,” a letter signed by the Finance Minister, Ken Ofori Attah said in part.

PDS took over ECG on March 1 after its major shareholder Meralco Consortium from the Philippines won the Millennium Challenge Power Compact Two from the U.S.A.

However a little over four months after the takeover, the government suspended the contract after the “detection of fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which has been discovered upon further due diligence.”

The PDS deal: Who is involved

In July 24, last year, Parliament approved the concession agreement between the government and consortium led by the Manila Electric Company (Meralco). The Energy minister Boakye Agyarjo said the shareholding structure of the successful consortium was constituted as follows: Manila Electric (Meralco) of The Philippines, 30 per cent; Aenergia SA (Angola), 19 per cent; Santa Baron Ventures Ghana, 13 per cent; TG Energy Solution Ghana, 18 per cent; GTS Engineering Ghana Limited, 10 per cent, and TBK Ghana Limited, 10 per cent. These companies formed a consortium known as Power Distribution Service (PDS).

Opposition reaction 

The Minority in Parliament accused the Akufo-Addo administration of fudging the original Power Compact II agreement to handover the management of the Electricity Company of Ghana (ECG) to surrogates of the New Patriotic Party (NPP).

“This project was expected to significantly improve access to electricity, ensure operational efficiency, turn around ECG, increase their profitability and have a sustainable, reliable and resilient delivery of power to the good people of Ghana,” said former deputy power minister John Jinapor.

He said the process, which commenced under the NDC in a very transparent and competitive manner culminated in the selection of six companies that were pre-qualified both through the RFQ stage and at the RFP stage.

“Unfortunately, however… upon assumption of office by the Akufo-Addo administration under the guise of the so-called local content participation, the government deliberately altered the original agreement in a manner and fashion to pave way for the contracts to be awarded to a cabal of companies that have no track record in the energy sector,” he stated during a press conference Thursday in Accra.

“This cabal …critical investigations revealed are not experienced in the power sector but rather a group of friends, cronies and NPP party apparatchiks contrary to the original goals, objectives and aspirations of the programme.”