Government has suspended the barely one-year old power agreement it entered into with Power Distribution Services (PDS).
The Information Minister Kojo Oppong Nkrumah announced the suspension in a statement released late Tuesday, July 30, 2019.
“The government of Ghana through the Ministry of Finance and the Electricity Company of Ghana (ECG) has suspended the concession agreement with Power Distribution Services Ghana Ltd with immediate effect,” the statement said.
According to government the contract was suspended because the Philipino company breached portions of the contract which are so fundamental to the execution of the contract.
“The decision follows the detection of fundamental and material breaches of PDS’ obligation in the provision of payment securities (Demand Guarantees) which have been discovered upon further due diligence. The demand guarantees were key prerequisites for the lease of assets on March 1, 2019 to secure the assets that were transferred to the concessionaire,” the statement added.
Government says it is conducting further investigations but has assured that the service delivery in the power distribution chain will not be affected.
PDS with its parent company Meralco Consortium won the bid to manage Ghana’s power distribution which was in distress.
PDS cancellation
The change in management was part of the Millennium Development Authority Power Compact II agreement which was supposed to bring efficiency in the management power distribution in the country.
As part of the Power Compact Agreement, the government was supposed to bring in a private entity to manage Ghana’s power distribution which has been pregnant with losses, wrong billings, failure to collect bills etc.
A number of companies sent in bids to be considered but government settled on Miralco Consortium amidst criticisms from the opposition and some workers of ECG.
Miralco was supposed to inject at least about $580 million in Ghana’s power distribution operations. It is not clear yet if the company has made any payment at all.
It is not clear yet if the suspension of the contract has anything to do with this capital injection.
