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02.08.2019 Feature Article

The PDS Wahala

The PDS Wahala

We were once told that, the black man is capable of managing his own affairs by Dr Kwame Nkrumah of blessed memory. Electricity Company of Ghana still continues to be one of our greatest National Assets and this has been the case since time immemorial.

It is painful to admit as a nationalist that, the idea behind the decision to privatise ECG still remainds a sorrowful mystery. No serious country in this world would try to hand over Assets of its Major Power Distribution Company to a foreign investor like what we just witnessed few years ago in Ghana.

Let me do my readers good by going through the history of the very conditions that gave birth to this brouhaha. In 2014, the Ghanaian Government signed a deal with the MCC for a development grant worth $500m. The conditions to receive the grant included the facilitation of the liberalisation of ECG.

The company’s inability to answer the country’s power needs, as well as its growing debt, was seen as a result of mismanagement that could be curtailed by a switch to private sector participation. This facilitation, however, also included the state paying off its $375m debts to ECG at the end of 2014.

On July, 2015, According to Dr Kofi Asamoa-Baah, Technical Advisor at the Ministry of Finance, The Electricity Corporation of Ghana (ECG) needed GH₵400 million annually to be able to operate effectively and efficiently.

However due to economic difficulties, Government could not raise the amount to assist the sector technically to perform to ameliorate the unbearable load shedding which crippled alot of businesses.

We were told that, the daunting challenges on the neck of ECG was a monumental burden to us as a result of that, costs Ghana five per cent of its Gross Domestic Products (GDP) and the situation had forced the country to violate international standards by recording more than 106 power outages in less than a year instead of a maximum of 10 outages as stipulated for the period.

All the above were strenuous challenges that gave birth to the idea by the previous Government to as a matter of urgency, get a second party to handle the power distribution company(ECG) to enhance effectiveness in delivery as well as efficiency. From the reasons they gave as a yardstick to privatise ECG, One would not be far from right to conclude that, had it not been mismanagement, financial distress, ECG wouldn't suffered this move to get it privatised.

However, the question we should all be asking ourselves is, how did we get to the current situation where it has become necessary that we needed the private sector participation in the management of ECG?

In 1994, the Government of Ghana received recommendations from its Consultant SYNEX (of Santiago, Chile), who it had contracted to study opportunities for reforming Ghana's Power Sector. SYNEX, among other things, envisaged in its recommendation to Government the introduction of Concession in power distribution.

Presently, ECG has close to about GHc1.7 billion debt sitting in its financial books. These are monies the power distribution company owes power generation companies. It is instructive to note that these debts are the creation of ECG themselves, Ministries, Department and Agencies (MDAs) as well as some members of the public who engage in illegal connections to enjoy free power with impunity so to speak.

It is against this background that former President John Dramani Mahama, in August 2014 in Washington DC, USA, signed an agreement with US Government through Millennium Challenge Corporation (MCC) to support Ghana's electricity sector with a grant of US$498.2 million to undertake specific programs and projects aimed to address the challenges in the sector.

The Power Compact II which was designed to create a self-sustaining energy sector in Ghana by reforming laws and regulations needed to transform the country’s power sector was also to allow private sector participation in ECG with the Power Distribution Services (PDS) expected to make an initial investment of US $ 586million over the first five years of its operations.

The compact would support improved management of Ghana’s entire power system, providing a more robust framework for private investment, in addition to a more competitive process for the procurement of power from independent producers. Again, it would address challenges in distribution, generation and access to energy in Ghana.

Per the initial agreement, the concessionaire was to hold 80% stake and manage ECG for a period of 25 years, while the Ghanaian ownership was to be the remaining 20% take. The initial agreement didn't go down well with workers of ECG which resulted in a serious protest against the previous government. They were however in fear that, such a move was going to give the highest holder of the concession to press the "lay off" button at the end of the day.

Consequently, and in fulfilment of a campaign promise prior to the 2016 general elections, President Akufo-Addo, upon assumption of office and through the then Energy Minister Boakye Agyarko reviewed the terms to the current one; where the Ghanaian ownership became 51% share with Meralco Consortium(PDS) grabbing the 49% stake as a means to ensure Job security among workers which earlier became their fear as a result of the initial agreement.

The millennium Development Authority(MiDA) who stood in for Government in the PDS transaction together with the International Finance Corporation in 2017 set up and inaugurated a Stakeholder Committee as part of the MCC Compact, in the presence of the crème de la crème of Cabinet Ministers; to interface with various constituencies represented on the committee as a means to complete in an executory manner the very irreversible agreement that was initiated by the previous Government in 2014.

MiDA is a body corporate established by Act,2006(Act 702) to oversee and manage the implementation of the Ghana Programme under the Millennium Challenge Account for the sustainable reduction of poverty through growth as contained in the agreement between the Government of Ghana and the Millennium Challenge Corporation acting for and on behalf of the Government of the United States of America and to provide for related matters.

It is for the above reason that, the millennium Development Authority came in as an advisory body in this transaction. Their core mandate was to protect the interest of Government through the help of IFC(as an Investment advisory agency).

On 30th July,2019, the Government through the minister of Information announced the suspension of the PDS executed agreement(Deal) pending an extensive investigation into what has been uncovered. This decision is as a result of subsequent detection of some anomalies pertaining to documents submitted by PDS as part of the requirement in fulfilling the agreement.

Today, the main opposition party is accusing the NPP Government of committing fraud against the good people of Ghana. Like seriously? which serious Government with the intention to commit fraud as a way of benefitting from same would move further as a condition subsequent to detect an alleged fraud and suspend execution of any agreement in relation to a contract already signed to ensure safety?

When NDC intended to create,loot and share in the woyome saga, didn't they pay GHC51.2m to him against the orders of Late professor Mills when they knew that, the man had no valid contract with the good people of Ghana? Were they not the same individuals who justified the woyome fraudulent payment?

The Nana Akufo Addo Government ought to be commended for not relenting in pursuing this move. Once upon a time, Some Government officials colluded with their own party financiers to milk the state dry. This is not the Government we are seeing today.

It must however be noted that, If the NDC had adopted the approach of this Government in suspending the deal, we wouldn't have wasted tax payers money like they did in the bus branding, woyomegate brouhaha, Sada, Gyeeda, Isofoton, Waterville, Asongtaba, Suba and the likes.

Dawda Eric(Equity)

Citizen Vigilance for Justice

2nd August 2019

[email protected]

Dawda Eric
Dawda Eric, © 2019

This author has authored 78 publications on Modern Ghana. Author column: DawdaEric

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