High Court Permits ECG Privatisation

The Accra High Court has dismissed an interlocutory application which sought to halt the planned concession of the Electricity Company of Ghana (ECG) to a private entity as part of an agreement between the company and the Millennium Challenge Corporation (MCC).

BXC Company Limited, one of the companies which lost the bid to manage the ECG under a concession agreement, filed the application after it sued the Millennium Development Authority (MiDA), the institution spearheading the process.

BXC marched to court with the case that it was unlawfully disqualified from the bidding process by MiDA, describing the disqualification as “arbitrary and without basis.’’

That was after MiDA announced that it had selected Meralco Consortium to manage the ECG under the Compact II Power Agreement.

BXC, through the interlocutory injunction, wanted the court to halt the concession process until the final determination of its substantive case.

Timelines

In a ruling yesterday, the court, presided over by Mr Justice Jerome Nkrumah, said halting the concession arrangement would make the country miss out on accessing the first tranche of $469m under the compact.

Under the compact, the United States of America (USA) government through the MCC must release the $469m in September, 2018, but is based on MiDA finding the concessionaire and parliament ratifying the contract.

The court was of the view that placing an injunction that could lead to the country missing out on the $469m would even not be in BXC’s interest.

“If Ghana misses out, there will be nothing for the applicant (BXC) to bid for,’’ the presiding judge said.

Adequate compensation

Another reason for the dismissal was that BXC in its suit was seeking $4m in damages for its disqualification.

In view of that the court held that there was no need for an injunction on the concession process because BXC could be adequately compensated in the event it won the substantive case.

On the other hand, BXC, the court said, was not in the position to compensate ECG and the government if the country missed out on the compact and it (BXC) lost the substantive case.

“The is unmeritorious and is, therefore, dismissed,’’ Mr Justice Nkrumah ruled.

Conflict of interest

According to the company’s statement of claim, MiDA disqualified BXC on the basis that there were “potential conflicts of interests” because of the existence of prior contracts between ECG and BXC.

But BXC averred that it disclosed to MiDA that it had contracts with ECG and had also heavily invested in Ghana’s power sector before it submitted its bid.
BXC is, therefore, seeking damages of $4 million, which it contends was “money it expended on preparing and submitting its bid”, as well as an indefinite injunction on the MiDA from going ahead with the concession process.

MiDA’s legal team, however, stated that the disqualification was lawful because it was not just because of the potential or actual conflict of interest.
“BXC also failed to state that it made false claims,’’ it said.

Other suits

On August 5, 2014, the government entered into an agreement with the USA, acting through the MCC, to make momentous changes in the power sector in Ghana.

Known as the Ghana Power Compact or simply Compact II, the MCC is expected to invest up to US$498.2 million to transform Ghana’s power sector and stimulate private investments.

The BXC case is not the first time the planned private participation in the ECG has come under legal attack.

In November, 2016, the Accra High Court dismissed a case filed by a farmer, Saaka Salia, on the basis that he had no legal capacity to initiate the action.

Another legal action challenging the concession, filed by more than 1,000 workers of the ECG and the Public Utilities Workers Union (PUWU), was also dismissed by the Accra High Court in October, 2017.

Source: Graphic Online