Institute of Energy Security (IES) has welcomed the decision by the Government to suspend the concession agreement with the Power Distribution Services (PDS).

The Government  on Tuesday  suspended the agreement it entered with PDS barely four months ago.

In a statement it said the decision to suspend the agreement with immediate effect, was taken after it discovered some breaches in the company’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence.

Speaking on Accra Base Citi FM, the research and Policy Analyst of IES Mikdad Mohammed’s said PDS must take full responsibility for the latest development.

“Is quite a double assault in one breath. We want to applaud the confidence of Government irrespective of the huge political cost for them to come out this way,” he said.

Meanwhile the PDS in a statement signed by its Chief Executive Officer William Hutton-Mensah, said it had taken note of government’s decision take through the Ministry of Finance acting for and on behalf of the government and the Electricity Company of Ghana (ECG).

It added that it will go through due process by complying with the terms of the transaction agreement with ECG and the government of Ghana through the Ministry of Finance.

“PDS wishes to state far the record that it has always acted and will continue to act in good faith at all times. PDS will go through due process by complying with the terms of the Transaction Agreements executed between it and ECG on one hand and GoG through MoF on the other hand,” the statement said.

Meanwhile, government says the suspension of the concession agreement will not interfere with the distribution of electricity services to customer

Following the suspension, the Former Deputy Minister for Energy and Petroleum John Abdulai Jinapor has urged government to permanently terminate the concession agreement with the Power Distribution Service (PDS).

It comes after government announced through a statement that the deal with PDS, who are now in charge of Ghana’s power distribution, has been suspended.

“The Government of Ghana through the Ministry of Finance and the Electricity Company of Ghana (ECG) Ltd. has suspended the concession agreement with Power Distribution Services (PDS) Ghana Limited with immediate effect.

“The decision follows the detection of fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence,” a government statement said Tuesday.

Background

Less than four months the Power Distribution Service PDS officially took over the distribution of power from the Electricity Company of Ghana ECG.

PDS took over ECG after its major shareholder Meralco Consortium from the Philippines won the Millennium Challenge Power Compact Two from the U.S.A. Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.

Under the Power Compact, six projects were being implemented to address the root causes of the unavailability and unreliability of power in Ghana.

.