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Business News of Tuesday, 24 April 2018


BxC heads to court over MiDA's ‘unfair’ treatment

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BxC Consortium, one of the two companies that was in the running to take over management of the Electricity Company of Ghana (ECG) under the Millennium Challenge Account Compact II, has declared its intention of seeking legal redress following its disqualification from the race to take over the power distributor.

The Millennium Development Authority (MiDA), which is in charge of selecting the company to manage operations of the ECG, announced Meralco – a Filipino company – as winner of the bidding process, having made it to the final lap of the process with BxC Consortium.

Despite announcing that both companies were duly evaluated and a winner selected, it has emerged that only Meralco was evaluated while BxC was disqualified on conflict of interest grounds.

A source close to BxC told B&FT the company is heading to court over the reasons which MiDA used in disqualifying it in the final lap of the bidding process.

A letter sighted by the B&FT written by MiDA and addressed to BxC Company on April 12, 2018, said the company was disqualified for failing to make its existing contractual relationship with ECG known in its initial proposals.

The letter thus accused BxC Ghana of conflict of interest on the basis of its relationship with ECG – as a result, the company’s financial proposal was not opened for evaluation and was returned to the company although the technical proposal had already been evaluated.

The source told the B&FT BxC is confident that it has done enough to win the ECG concession and that the conflict of interest grounds used by MiDA is not justified, and so it is confident any court it goes to will quash MiDA’s action.

According to MiDA in statement after the selection of Meralco, “Negotiations will soon commence to finalise all agreements related to implementation of the ECG PSP Transaction”.

But a court action by BxC will most likely throw the ongoing process out of gear unless the two parties are able to reach an out of court settlement. But should the court process be allowed to go the full haul, it will have dire consequences for the Compact II which already has to meet a strict deadline of close of year.

Conflict of interest

BxC’s disqualification was premised on a number of contracts it signed with ECG to help the power distribution company reduce its losses in a number of operational areas.

While this relationship has been in the public eye and a number of documents submitted to MiDA by BsC confirmed this relationship, MiDA in its April 12 letter said: “Ghana is in possession of information concerning prior or existing contracts with ECG, including without limitation the Distribution Losses and Associated Network Improvement contract between ECG and BxC dated September 2011, as amended on 24 March 2017 and 11 August 2017; and has determined on the basis of this information that:

one or more conflicts of interest or potential conflicts of interest exist
that the foregoing statement by the BxC Consortium is false and/or misleading; and
that such false and/or misleading statement is material in nature.”

BxC’s ‘sin'

In spite of the company admitting that its existing relationship with ECG puts it in better stead to manage the ECG on a full-scale basis, the company in its Technical Proposal stated: “We are not aware of any actual or potential conflict of interest arising from a prior or existing contract or relationship with Ghana, ECG, their affiliates, representatives, advisors or consultants”.

MiDA proceeded to evaluate BxC’s technical proposal despite the fact that the decision to disqualify the Chinese-based company was premised on the undertaking made in the Technical Proposal.