The Electricity Company of Ghana (ECG) has from today, Wednesday, October 23, 2019, assumed full control of electricity distribution business in the southern part of Ghana.
This follows the termination of the concession agreement between the Ghana Government and the Power Distribution Services.
“The Electricity Company of Ghana Limited (ECG) has today, 23rd October, 2019 terminated Private Sector Participation Transaction Agreements with Power Distribution Services Ghana Limited (PDS). ECG has therefore assumed full operational and financial control of the electricity distribution business in the Southern Zone of Ghana with immediate effect. Consequently, all activities which were hitherto undertaken by PDS have reverted to ECG,” ECG said in a statement.
Per the statement ECG will undertake the following:
• Metering
• Billing
• Distribution of bills
• Bill reconciliation
• Revenue collection
• New Service connections
• Disconnections and reconnections
• Faulty meter replacements
• Network faults and repairs
• Network Operations, Maintenance, Expansion and Rehabilitation
• Complaints and fault reporting to the call centres
• Any other related services
“Accordingly, all cheques issued in respect of power purchases and other related activities should be in the sole name of Electricity Company of Ghana Limited. All assets currently in the name of PDS [will] revert to ECG with immediate effect and will be rebranded in accordance with the decision over the next few weeks. ECG will continue to provide quality electricity services to our cherished customers and stakeholders,” the statement from ECG added.
Background
On March 1, 2019, Ghana Power Distribution Services, Ltd. (PDS) assumed operation and management of the staff and assets of the Electricity Company of Ghana (ECG) under a 20-year concession agreement.
Private sector participation is a central reform under MCC’s Ghana Power Compact.
This is critical to the long-term sustainability of related infrastructure investments and the financial recovery of the energy sector in Ghana.
The Compact comprised two tranches of funding: $308 million available upon the official start of the Compact, and a second tranche of $190 million, which was available upon a successfully executed concession agreement, which the United States maintains occurred on March 1, 2019.
Suspension
The Government of Ghana had earlier suspended the PDS concession agreement over what it said was the discovery “of fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees).”
President Nana Akufo-Addo justified the decision saying it was in the interest of the public as it was important to protect the assets of the Electricity Company of Ghana which is worth some $3 billion.
Addressing the Ghanaian community in Angola in August 2019, President Akufo-Addo said: “We decided that the first thing to do was protect the public assets by suspending the participation of this private sector operator and returning the control of the assets to ECG while the process of investigation will be carried out…It was necessary for us to act in that manner to protect the public assets. ECG assets are in excess of GHC 3bn. These are not assets that you take lightly.”
Termination
The government officially announced the termination of its power concession agreement with PDS in a statement dated Friday, October 18, 2019.
It said in the statement that the decision was taken at a meeting in the US with the Secretary to President Akufo-Addo, Nana Bediatuo Asante and officials of the Millennium Challenge Corporation.
Termination of PDS deal was unwarranted, $190m withdrawn – US
The United States of America subsequently expressed its dissatisfaction with the action by the Ghana Government describing it as unwarranted.
Despite the government’s claims of fraud in the deal, the US in a statement from its Embassy in Ghana insisted that the agreement was valid.
“Based upon the conclusions of the independent forensic investigation, the U.S. position is that the transfer of operations, maintenance, and management of the Southern Distribution Network to the private concessionaire on March 1, 2019, was valid, and therefore the termination is unwarranted,” the statement read.
The termination of the deal also means Ghana will be losing out on $190 million.
The statement noted that, following the termination of the deal, the Millennium Challenge Corporation (MCC) has confirmed that “the $190 million funds granted to Ghana at the March 1 [2019] transfer to the 20-year concession from ECG to PDS are no longer available.”
The US, however, says it will “continue to implement the Tranche I funds of $308 million with the Millennium Development Authority (MiDA). ”
