The Akufo-Addo government has officially announced the termination of its power concession agreement with Power Distribution Services (PDS).
It said in a statement that the decision was taken at a meeting in the US on Friday, October 18, 2019 with the Secretary to President Akufo-Addo, Nana Bediatuo Asante and officials of the Millenium Challenge Corporation.
“The current concession had to be terminated in view of the facts uncovered regarding the failure by PDS to satisfy conditions precedent under the relevant transaction documents,” the statement said.
The concession agreement was suspended on July 30, 2019 by the government due to what it called “fundamental and material breaches”.
Details of the alleged breach revealed that PDS’ guarantee was irregular and fraudulently procured.
The government came under attack over the development but it rejected accusations that it was negligent in the exercise of its duty to thoroughly scrutinize documents presented by PDS before a final agreement was signed for its concession agreement.
The government constituted a committee to investigate the development and ascertain its nature.
Proceedings from the investigations led to the eventual decision announced in the latest statement.
The statement, signed by the Finance Minister, Ken Ofori Atta said the government will make every effort to ensure that a suitable replacement for PDS is found within the relevant timelines to ensure that the government of Ghana completes the Compact.
“Every effort would be employed to ensure a suitable replacement within the relevant timelines in order to complete the Compact,” the statement said.
The government in a detailed justification for the termination of the contract said a letter from Al Koot to ECG indicated that it was not authorized to undertake the trade risks as it had done.
“However, on 24th June, 2019, ECG received a letter dated 16th June, 2019 from Al Koot in which it made among others, the following assertions:
i. Al Koot is not authorised by its constitutional documents to underwrite counter party and trade risk;
ii. The Guarantees purportedly issued in respect of the Transaction is not an approved product line;
iii. The Demand Guarantees were not executed by authorised signatories of Al Koot
iv. The letter dated 13th March, 2019 forwarded by MiDA to ECG purporting to confirm the issuance of the Demand Guarantees was part of the misrepresentation in respect of the purported issuance of Demand Guarantees to secure the transfer of assets of ECG to PDS, as the signature on the letter was forged;
v. Al Koot denied the existence of the Guarantees;
vi. Al Koot refused to accept any present or future legal obligations in connection with the purported Guarantees;
vii. Criminal action will be instituted by Al Koot against personnel and all reinsurers who might have aided and abetted the fraudulent issuance of the unlawful Guarantees.”
The government has however reiterated its commitment to ensuring private sector participation in Ghana’s energy sector.
“Indeed, Government intends to see this PSP through in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact.”