Ghana government ends concession for Meralco’s ECG takeover
By Lenie Lectura -October 23, 2019
from Business Mirror
THE Manila Electric Co.’s (Meralco) concession for the operation and maintenance of the assets and facilities of the Electricity Company of Ghana (ECG) has been terminated by the Government of Ghana.
Meralco is part of the consortium, Power Distribution Services (PDS) Ghana Ltd., which had been awarded a 20-year concession to take over the operation and management of state firm ECG. It has a 30-percent stake in the consortium.
PDS is a consortium between Meralco through Meridian Power Ventures Ltd., AEnergia SA, an Angolan company, and three Ghanaian firms—TG Energy Solutions Ghana Ltd., Santa Power Ltd. and GTS Power Ltd.
The concession was earlier suspended by the government of Ghana due to alleged material breaches in the provision of the demand guarantees by PDS.
Meralco said Tuesday the concession had been terminated due to alleged material breaches in the provision of the Demand Guarantees by PDS.
However, Meralco said such claims are invalid because the Demand Guarantees were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance Qatari insurance firm.
“Based on the letter signed by Minister Ken Ofori-Atta of the Ministry of Finance of Ghana, the forensic audit by the auditors chosen by the Millennium Development Authority indicated that the purported Demand Guarantees were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance, Qatari insurance firm and were therefore invalid,” the utility firm said.
The Demand Guarantees were key prerequisites and condition precedent for the turnover of the assets and facilities of ECG to PDS.
“The same report also mentioned that there was no information available to forensic auditors to suggest that PDS committed fraud in relation to the Demand Guarantees. PDS has maintained that it procured the Demand Guarantees in good faith and that it has no knowledge of any issue with same until the suspension of the Concession,” said Meralco.
Meralco President Ray Espinosa earlier said that he is personally slowly losing interest because Meralco has offered the best terms and yet the government of Ghana suspended the concession agreement.
“We’re exposed to political risk, ang layo layo pa (and it’s so far). So, (our terms are good), but if we will be exposed to these types of uncertainties, we might as well pull out and just devote our attention to the country. And even in Asia, it’s more stable. Maybe we don’t have the constitution or the DNA for that kind of risk in Africa yet,” he commented.
The consortium had planned to invest of more than $580 million for capital expenditures and is expected to strengthen the governance, management and operations of the ECG and improve the delivery of power to end users, as well as support Ghana’s socioeconomic growth
Meralco’s share would have amounted to $40 million over five years.
The bid of PDS included equity ownership and management of the concession company that would take over ECG, which supplies 80 percent of the population of Ghana through 3 million accounts.
