ACEP Punches Holes Into ECG PSP Deal

The Africa Center for Energy Policy (ACEP) has expressed concerns about some aspects of the Electricity Company of Ghana (ECG)'s private sector participation (PSP) concession agreement currently awaiting ratification from Parliament.

According to ACEP, the current consortia that have entered into an agreement with the government could not be said to have satisfied requirements in the Request For Quality (RFQ) and Request For Proposal (RFP).

“This is because at the time Meralco submitted its bid the entities in its consortium, now 70% owner of the arrangement, were not part of the arrangement.

“Meralco was the only company that went through the bidding process without local partners until they won the bid as sole successful applicant. The fundamental clarity required at this point for Parliament and the general public is how did Meralco's partners satisfy the RFQ and the RFP after the close of bids?”

Also, it said the bidders were required to submit an affidavit from each member of their consortia to confirm that all of them had duly paid up their taxes and did not have any criminal records, among others.

Meralco must respond
ACEP specifically called on Parliament to demand Meralco's response to the RFQ and RFP to satisfy itself that the company complied with the RFQ and RFP in addition to verifying the affidavit submitted by all the parties to the agreement to be satisfied that the individuals and entities in the consortium were credible to handle the national asset.

It further asked for Parliament to verify the beneficial ownership of the members in the consortium.

“Again, one of the members of the consortium TG Energy Solutions Ghana Limited applied and did not qualify during the RFQ process. It is important to know what made them eligible to be part of the PDSG consortium, having failed to qualify for the prequalification.”

Tax payment
ACEP recommended that taxes should be paid directly to GRA by the company which could be reconciled by data provided by ECG, saying that would reduce the transaction time of moving tax revenue from the company to ECG before going to GRA/the Consolidated Fund

Portfolio PPAs missing
It said the deal's schedule provided for the list of portfolio Power Purchase Agreements (PPAs) to be transferred to the company.

However, the document presented to Parliament for approval did not contain the list of portfolio PPAs while it did not provide certainty on the plants that have been agreed to constitute the portfolio PPAs.

Periodic performance data
“The agreement does not provide for the publication of periodic performance data by the company. There is the need for the public to be part of the monitoring of the concession agreement through availability of data.”

Non-payment of bills
It said that a major challenge ECG has faced over the years is the non-payment of bills by the government, which has contributed to the financial challenges of the utility.

“Under the PSP all government departments will be provided with prepaid meters to compel government to pay its bills.”

ACEP further noted that the agreement proposed the exclusion of “strategic facilities” in Listed MDAs, Office of the President, Ministry of Defence, the Ministry of Interior and the Ministry of Health, however the specific facilities to be exempt from prepayments metering under those MDAs were not given.

Payment strategy
“The agreement also does not provide a strategy to pay for the electricity use of the strategic facilities. The MDs pencilled as strategic happen to be the most energy demanding ones, usually operating for 24 hours, in the entire government setup. Without mechanism to pay the bills, the risk of government default is still high and threatens the sustainability of the concession agreement.”

Consortium formation questioned
“What remains unclear is how the consortium was formed after Meralco won the bidding process. MiDA has to explain this to the public.”

Background
Government, through the Millennium Development Authority (MiDA), selected Meralco as the eventual winner of the Private Sector Participation (PSP) bid to take over the operations of the Electricity Company of Ghana (ECG) in a 20-year concession.

If this is approved, Meralco would begin management of ECG from February, next year. Cabinet has already approved it.

Boakye Agyarko, Energy Minister, stated that ECG would not be scrapped, adding that it would sublet power distribution to a company known as Power Distribution Service Limited.

By Samuel Boadi