Gov’t to terminate concession agreement with PDS?

The government has already decided to terminate the concession agreement it signed with the Power Distribution Service (PDS) according to usually reliable sources within the Ministry of Energy who understandably spoke to Goldstreet Business on strict condition of anonymity.

A reliable source at the Energy Ministry has confirmed to the Goldstreet Business that the PDS which has become the biggest subject of discussion in Ghana over the past week or so, will not be allowed to continue as a power distributor.

“I can confirm that the contract isn’t going to continue. The contract is being terminated, with the suspension being just procedural” the source confirmed.

However, government still has about three weeks to announce a public decision on the completion of an ongoing investigation it claims it is carrying out, which is expected to be ready by end of August. Unsurprisingly, government officials are vehemently denying the termination of the contract, insisting that it is the results of the ongoing investigation that will determine the fate of the concession. But if it is indeed true that a decision has already been made – but is simply being kept under wraps for now – it would confirm the allegations of the growing number of conspiracy theorists who are claiming that the real issue is a falling out between Meralco and some unidentified top government officials over the shareholding composition of PDS. Under the concession agreement Ghanaians are supposed to retain a majority 51 percent equity stake in PDS.

Electricity Corporation of Ghana, acting on behalf of the Government of Ghana, signed a concession agreement with the PDS on March 1, 2019.

The move, which is a key part of the wider Millennium Challenge Corporation Power Compact II, requires private sector participation in the country’s power distribution business. However, after  barely five months of operation, government announced PDS’s suspension for alleged fundamental and material breaches in the power distributor’s obligation in the provision of payment securities for the transaction which had been discovered upon further due diligence.

In a bid not to disrupt electricity distribution, billing and payment services, and government has appointed ECG as interim electricity distributor until the investigations are finalized.

Meanwhile, the Energy Commission has withdrawn the EC/ESL/02-19-001 license which the commission issued to PDS following the commencement of the concession. The commission has instead, offered the license to the ECG as the interim distributor of electricity in the southern zone.

The Commission explained that the decision was based on the validity of the said license becoming impaired, following PDS’s suspension based on the alleged breaches.