PDS Deal… Gov’t ‘Shops’ For Investors

The government is currently seeking a strategic investor to replace the Power Distribution Services (PDS).

In the view of the government, it remains committed to private sector participation in Ghana’s energy sector but with a focus on restrictive tendering.

This was contained in a detailed letter dated October 18, 2019 signed by the Finance Minister, Ken Ofori Atta explaining what led to the termination of the controversial PDS contract.

The government on July 30 announced the suspension of the contract with PDS, barely six months after the company took over from ECG.

The letter is a sequel to the termination of the PDS concession agreement terminated on the instruction of the President, Nana Akufo-Addo, over irregularities which brings to an end, PDS’ short-lived control of the country’s electricity supply.

The company was engaged in March but since its suspension on July 30, PDS had been embroiled in a corporate governance tussle among the shareholders.

The government said it is committed to seeing through a Private Sector Participation (PSP) “in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact.”

While stressing Ghana government’s desire to ensure private participation in the power distribution sector, Mr Ofori Atta also underscored the need for transparency in the procurement process.

“Whilst recognising the prerogative of the MCC in the determination of a particular procurement method in the selection of a PSP, in view of the limited time (approximately two years) until the expiration of the Compact II Program, Ghana hereby recommends the adoption by the MCC/MiDA of a restricted tender process to replace PDS. This restricted tender process shall be undertaken timeously by fast-tracking some of the processes without compromising the integrity and transparency of the procurement processes,” the letter, explained.

According to the letter, the move is to beat the “limited time” available before the Compact II Program with the government of Ghana and the US expires.

The US would pump some half-billion dollars into Ghana’s energy sector under the so-called Compact II Program, which requires Ghana to allow private sector participation in the energy sector.

The government however, insists that these challenges do not “diminish” its commitment to allowing private sector participation in the energy sector.

PDS was chosen to perform this role until the government suspended and subsequently terminated the agreement with the company following controversies surrounding the demand guarantee it submitted to Ghana before taking over the assets of the Electricity Company of Ghana.

“Government intends to see the process through in a manner that follows due process and protects the interest of all parties,” the Finance Minister’s letter said.

It further revealed that there has been a meeting between the CEO of MCC, Sean Cairncros and President Addo Dankwa Akufo-Addo in New York with an understanding that a new concession will be executed “within existing timelines and in any event before December 31, 2019.”

“It is worth recalling that following this understanding, Mr Cairncross and President Akufo-Addo shook hands and committed to expeditiously putting the understandings into effect,” the letter stated.

Touching on the future of the contract with PDS, the letter noted: “a consideration of the future of the transaction with PDS will have to be made within the compass of what due process requires, as well as what the constrains of the time dictate for the government of Ghana to achieve the objects of the compact.”