You are here: HomeBusiness2020 08 28Article 1045489

Business News of Friday, 28 August 2020


PDS sues govt for terminating contract – Oppong Nkrumah reveals

Information Minister, Kojo Oppong Nkrumah Information Minister, Kojo Oppong Nkrumah

Power Distribution Services Limited (PDS) has sued the government of Ghana for wrongful termination of its contract with the state.

This was disclosed by Information Minister Kojo Oppong Nkrumah.

“Yes, PDS has sued the government in the court here in Ghana…wrongful termination is one of their claims”, Mr Nkrumah noted.

“We’ve contested that and we have grounds for contesting it so those are the matters that are currently in court. We are pretty confident that our case before the court will hold up at the end of the day,” the Ofoase Ayirebi lawmaker said in an interview on Accra-based Joy News.

PDS, a private entity was in March 2019 contracted to distribute electricity to the southern part of the country, taking over the Electricity Company of Ghana.

However, in October 2019, the government of Ghana terminated its agreement with the power distribution company.

A letter dated 18 October 2019 signed by Finance Minister Ken Ofori-Atta sighted by, said: “Following consultations with Government, we wish to emphasise that Government remains strongly committed to the Compact and to private sector participation in the Electricity Company of Ghana.

“We also wish to reiterate the position communicated to the CEO of the MCC by the President of Ghana during their meeting on the sidelines of the United Nations General Assembly in New York on September 23rd to the effect that, the current concession had to be terminated in view of the facts uncovered regarding the failure by PDS to satisfy conditions precedent under the relevant transaction documents AND, however, that every effort would be employed to ensure a suitable replacement within the relevant timelines in order to complete the Compact.

“The Government decision to terminate the PDS concession and find a replacement in a timely manner to successfully conclude the Compact is based on two key points: First of all, it is Government’s view that the meeting between the CEO of MCC and the President of Ghana produced an understanding that the existing concession would be discontinued and a concession restoration and restructuring plan 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. Following the meeting, however, MCC sent an implementation plan, which in our opinion did not accurately reflect the outcome of the New York meeting.

“Secondly, the facts detailed below clearly justify the discontinuance of the current concession which, it should once again be emphasised, does not in any way diminish the Government of Ghana’s commitment to private sector participation in Ghana’s energy sector.

Indeed, Government intends to see this PSP through in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact”, the letter said.