Meralco-led group loses power distribution deal in Ghana
The Ghanaian government has terminated power distribution concession of a Meralco-led consortium due to alleged “making false declaration and misrepresentation of facts” related to demand guarantees on assets relevant to the contract.
Manila Electric Co. holds a 30-percent interest—a minority but the biggest stake—in Power Distribution Services Ghana Ltd. (PDS).
PDS is the special purpose vehicle created by the Consortium that won the privatization of the operation and maintenance of the assets of state firm Electricity Company of Ghana (ECG).
Based on the terms of the concession, the consortium was expected to invest a total of $581 million during the first five years of the contract period, to improve ECG’s distribution business and the reliability of power supply in Ghana’s capital region.
The scrapping of the concession comes almost three months after the Ghanaian government suspended the deal due to alleged irregularities.
In a regulatory filing, Meralco said Ghana terminated the concession “principally due to alleged material breaches in the provision of the demand guarantees by the PDS.”
The demand guarantees were key prerequisites and condition precedent for the turnover of the assets and facilities of ECG to PDS.
Citing a letter signed by Ken Ofori-Atta, Ghana’s minister of finance, Meralco said an audit undertaken by the African country’s government indicated that the demand guarantees “were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance, Qatari insurance firm and were therefore invalid.”
Even then, the audit report also mentioned that there was no information available to forensic auditors to suggest that PDS committed fraud in relation to the demand guarantees.
PDS maintained that it had procured the demand guarantees in good faith and that it had no knowledge of any issue with same until the suspension of the concession,” Meralco said.
Ofori-Atta himself visited the Philippines earlier this month as leader of a Ghanaian delegation to mark the 60th anniversary of diplomatic relations between Accra and Manila. Ghana’s energy minister John Peter Amewu was also part of the mission.
In a statement dated Oct. 14, Amewu expressed his gratitude “for the reaffirmation by Manila Electric Co. of its “commitment to Ghana’s power sector.”
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