Former Deputy Minister of Energy and Petroleum, John Abdulai Jinapor, has been vindicated after he predicting that the country’s electricity distribution in the hands of Power Distribution Services (PDS) will hit a snag.
The government on Tuesday July 30, 2019 suspended with immediate effect a power distribution agreement with PDS, saying it has identified “fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) for the transaction.”
A statement signed by the Information Ministry also added that: “The Demand Guarantees were key prerequisites for the lease of assets on 1st March 2019 to secure the assets that were transferred to the concessionaire which have been discovered upon further due diligence.”
In April this year, Mr. Jinapor pointed out that the deal was “not only flawed but also inimical to the interest of Ghana”. According to him, the deal was bad as against the original agreement, releasing a statement to urge the Government to review the deal that pave the way for Power Distribution Services (PDS) to take over from ECG.
“However, under the guise of promoting local content, the Akufo-Addo led government altered the original agreement to pave way for the contract to be given to a consortium made up of friends, cronies and party apparatchiks contrary to the original goals and objectives of the entire programme.
“It is becoming clear that Ghanaians have been given yet another raw deal with the award of such a key state institution with assets worth 22 billion Cedis under this fishy and shady transaction,” Jinapor said in a statement.
PDS took over ECG after its major shareholder Meralco Consortium from the Philippines and won the Millennium Challenge Power Compact Two from the United States of America (U.S.A). Ghana signed the Power Compact with the USA 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 are being implemented to address the root causes of the unavailability and unreliability of power in Ghana.
Read the full statement by Hon Jinapor back in April below.
REVIEW ECG/PDS AGREEMENT – IT IS A BAD DEAL
I have followed with keen interest the implementation of the ECG Financial and Operational Turnaround Project. I am convinced beyond any doubt that though the Project was a noble initiative, the selection processes leading to the selection of Power Distribution Services (PDS) as the preferred concessionaire is not only flawed but also inimical to the interest of Ghana. Therefore, the concession must be reviewed immediately.
For the record, Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), on the side-lines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014 under H.E. President John Dramani Mahama.
Under the Power Compact, six projects are to be implemented to address the root causes of the unavailability and unreliability of power in Ghana.
The ECG Financial and Operational Turnaround Project had a primary objective of improving access to electricity, increasing efficiency in the power distribution system and reducing financial leakages of the company to make it profitable.
The process was in a transparent and competitive manner under the NDC with the overall objective of selecting a company with the requisite technological, financial, and operational know-how to manage the asset base of ECG in an efficient and productive manner.
This culminated in the shortlisting of 6 companies following the “Request for Qualification (RFQ)” for the Management, operation, and Investments in the electricity distribution business of the ECG on 9th May, 2016.
However, under the guise of promoting local content, the Akufo-Addo led government altered the original agreement to pave way for the contract to be given to a consortium made up of friends, cronies and party apparatchiks contrary to the original goals and objectives of the entire programme.
It is becoming clear that Ghanaians have been given yet another raw deal with the award of such a key state institution with assets worth 22 billion Cedis under this fishy and shady transaction.
Therefore, it is important to take a critical look at the Ghanaian partnership in the consortium since this government claims to be promoting local content.
For example, from the evidence presented to the Parliamentary select Committee on Mines and Energy of which I am a member, one of the local shareholders, TG Energy Solutions Ghana, which has 18 percent shares in the Consortium of investors, making it the largest Ghanaian shareholder in the transaction, has a questionable record as far as the energy sector is concerned.
Furthermore, the NPP Member of Parliament (MP) for Sekondi, Andrew Agyapa Mercer is a Director of this Company and Lawyer Sophia Kokor of Danquah Institute, a known NPP Advocacy Group is also a Director of TG Energy Solutions Ghana.
In addition, one Mr. Philip Ayesu, owner of X Men Barber shop is the main shareholder of TG Energy Solution.
Also, my detailed checks show that this company lacks the technical expertise and financial capacity in the energy sector to manage a critical State-owned company such as the ECG with an asset value of over 22 billion cedis and a workforce of more than 6,000.
It is curious, mind-boggling and alarming to note that at the time of filing documents, TG Energy Solutions had no office or physical location as per the documents presented to the committee by MiDA.
How a company that has no office address was able to obtain the highest shares in PDS defies logic and reasoning.
It therefore came as no surprise that the scheduled takeover on 1st February was postponed by the Millennium Development Authority (MIDA) due to what they described as lapses that needed to be clarified.
It is curious to note that at the time of announcing what MiDA describes as a “preferred bidder” by Pamela Djamson-Tettey, Director, Communication and Outreach at MiDA, all Tier One and Two companies had pulled out following the alteration of the bid process.
As if this shameful episode was not enough, BXC Consortium was also disqualified by MiDA, making Meralco Consortium (a Tier three company) from Philippines the sole company left in such a major project.
These raise serious about doubts both fairness and competitiveness of the process.
Even more bizarre is the fact that, the so-called Ghanaian companies were selected under very suspicious and clandestine processes long after Miralco had participated as a sole entity.
One cannot lose sight of major infractions in relation to some critical clauses in the Agreement. For example Article 2.23(g) states emphatically that “Without limiting the rights of ECG pursuant to this Section 2.23, ECG and the Company shall, prior to the Transfer Date, jointly prepare an ECG monitoring schedule and protocol consistent with this Section 2.23” providing further detail on ECG’s planned monitoring of the Distribution System.
It is therefore shocking that the Akufo-Addo Government failed to ensure that the Monitoring Schedule and Protocol Agreement which is key to ensure that the assets of ECG are monitored during the concession period was not executed.
By this unfortunate omission, ECG will not be in a position to ensure that its assets are well managed and maintained by PDS.
The question to ask is: why would public officials rush to push ECG to hand over its assets without ensuring that the critical conditions and clauses in the agreement are met?
As a result of these breaches and obvious cronyism, I call on well-meaning Ghanaians to demand full disclosure of the Performance Guarantee issued by PDS which was a critical Condition Precedent for take over of ECG assets. I am also calling for same.
The details of the guarantee supposedly issued by PDS must be made available for scrutiny since available information suggests this key requirement was not properly executed.
As it stands, the concession in its current state will certainly not serve the interest of Ghanaians.
The concession is highly inimical to the aspirations of Ghana’s power sector goals.
The concession, if left in its current state, has the potential of destabilizing the whole energy sector with very serious consequences including rising cost of power and crippling of power generation companies.
Therefore, this concession agreement must be reviewed immediately.
Signed:
John Abdulai Jinapor