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04.08.2019 Feature Article

On PDS debacle: When due diligence stymied a repeat of Waterville

On PDS debacle: When due diligence stymied a repeat of Waterville

I would like to wade into the ongoing public discourse on the Government of Ghana’s suspension of the electricity consortium, the Power Distribution Services (PDS), who has allegedly breached the existing contract.

I should, however, begin by humbly sounding out a caveat to an effect that this article is not an expert opinion on the matter at hand, but it is rather an in-depth annotation which seeks to grub into the commonsensical perspectives within the suspension of the consortium, the Power Distribution Services (PDS).

Let me also quickly add that in order not to leave dearest discussants in a miserable boredom, I shall resist the temptation of belabouring the point on the genesis of the contract between the Government of Ghana and the Power Distribution Services (PDS).

What, however, not in contention is that, during the previous NDC administration, Ghana decided to give out the services of the Electricity Company of Ghana (ECG)on concession to a private organisation (for 20 years), after unpronounceable years of mismanagement of the sector by our own.

Let us also agree that the concession was necessitated by the recommendations put forward by the International Finance Corporation (IFC) of the World Bank that, the best option to remedy the challenges in the energy sector in Ghana was to introduce private sector participation in the distribution section of the sector.

In retrospect, the International Finance Corporation (IFC) suggested two possible options to the Government of Ghana, among other things, to enter into a concession agreement with a private entity, or to partially privatize ECG.

Upon the IFC’s recommendations, the Government of Ghana decided to give out ECG on a concession agreement.

The erstwhile NDC administration decided 25 years duration, and was later changed to 20 years by the NPP government.

The concession agreement was part of activities under the Millennium Challenge Corporation (MCC) of the USA’s second compact with the Republic of Ghana.

After years of hectic selection process, the Philippines based utility provider, Meralco, was selected alongside AEnergia SA, an Angolan company, and three local Ghanaian Companies, namely, TG Energy Solutions Ghana Limited, Santa Power Limited and GTS Power Limited, forming the PDS.

Note however that, the NPP government changed the initial proposal of the makeup of the consortium.

The Akufo-Addo’s administration deemed it fit to change it from 80% foreign and 20% local to 49% foreign and 51% local respectively.

In the grand scheme of things, PDS was expected to invest some $580million over a period of five years into the organisation.

But lo and behold, the tattle tales have it that, the consortium, PDS, has allegedly been indulging in fundamental and material breaches of the contractual obligations.

So, it came as no surprise to some of us at all, when Ghana’s Information Minister, Kojo Oppong Nkrumah, recently announced the suspension of the electricity consortium, PDS.

According to the Information Minister, the Electricity Company of Ghana (ECG) has uncovered serious violations in the provision of Payment Securities (Demand Guarantees) upon further due diligence.

Following the chilling announcement, I have been listening and reading the views of some concerned Ghanaians on the suspension of the consortium, PDS, and would like to disagree with them, although, I respect their opinions.

There are those who argue that for the NPP government to only uncover breaches barely five months into a twenty year agreement is a sign of bad governance.

I disagree. To use five months to investigate and discover such a labyrinth scheme cannot be said to be a perfunctory undertaking.

Five months may be too long a time in the eyes of the sceptics, but it is better late than never, they say.

After all, it took us so many years to unearth the scheming guiles of the conspiratorial plotters in the scandalous deals such as the Woyome dubious judgement debt payment, the Waterville, the Isofoton, among others, and, in the end it became extremely difficult to retrieve the huge monies involved.

We should, therefore, take solace in the fact that, in the case of the electricity consortium, the Power Distribution Services (PDS), at least, there are no reported cases of serious harm.

K. Badu, UK.

[email protected]

Kwaku Badu
Kwaku Badu, © 2019

This author has authored 815 publications on Modern Ghana. Author column: KwakuBadu

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