Government has with “immediate effect” suspended its concession agreement with Power Distribution Services (PDS).
A statement from the Ministry of Information said the decision was taken after government discovered some breaches in the company’s obligation in the provision of Payment Securities.
PDS officially took over services from the Electricity Company of Ghana (ECG) in February 2019 after winning the bid to run the power service several months earlier.
The company was expected to turnaround the operations of ECG to make it profitable.
It was also supposed to improve access to electricity while cutting down on wastage in the system as well as blocking all leakages that drained the financials of ECG.
The company inherited huge debts from ECG, most owed by government through its Ministries, departments and agencies.
PDS’ operations over the past few months have been fraught with many challenges including frequent power cuts and huge debt it owed some Independent Power Producers (IPPs).
Earlier this month, the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDIB) issued a seven-day ultimatum over $600 million owed it by the government.
It threatened to cut the supply of power to PDS if the amount was not paid.
The government said it was not responsible for the payment rather it was an issue between PDS and ECG and they needed to find a way to address it.
PDS later said ECG was responsible for the payment.
Days later, the Electricity Company of Ghana (ECG) confirmed receipt of GHc 200 million from PDS Limited which it said it has paid to the IPPs to defray part of the debt.
The journey to get a private sector player to manage the affairs of the ECG started after Ghana won the power compact two which was expected to inject some 900 million dollars into ECG.
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 supposed to have been implemented to address the root causes of the unavailability and unreliability of power in Ghana.
The project included ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.
The rest included Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.