Uncertainties grip businesses over PDS suspension

Businesses have been expressing worry and uncertainty about the recent suspension of the Power Distribution Service long term concession by the government on an alleged detection of fundamental and material breaches of PDS’ obligation in the provision of payment securities (demand guarantees) for the transaction which have been discovered upon further due diligence.

While businesses are sceptical about what the outcome of the investigation will be, they are however unsure if the ECG, which has been re-appointed as interim electricity retailer by government, will also do a good job, based on previous experiences.

The questions is, whether the ECG can now effectively and expertly distribute power even in the interim as a retailer. Just is important is the fate of the plans for US$500 million in new investment by PDS to expand and upgrade the electricity distribution infrastructure, which is now the main bottleneck in Ghana’s power sector now that it has excess capacity with regards to generation.

Some power-intensive industries are already considering putting expansion plans on hold while some planned startups are similarly considering holding back until the situation concerning infrastructural upgrades becomes clearer.

But Information Minister, Kojo Oppong-Nkrumah has said government has commenced a full-scale inquiry into the purported breaches in the concession agreement it signed with the PDS.

According to him, investigation into the alleged breaches in the agreement is expected to be completed within 30 days.

He told journalists at a press briefing in Accra that the team conducting the inquiry comprises insurance investigation experts, officials of the Energy and Finance Ministries and officials of the Electricity Company of Ghana (ECG) as well as Millennium Development Authority (MIDA).

“The inquiry will determine the nature of the breaches and advise on suggested next steps. By Tuesday, August 6, 2019, the team is expected in Doha, Qatar as part of the inquiry. All interested parties are cooperating with the inquiry at this stage. A second team has been tasked to continue engagement with the American government through its agency, the Millennium Challenge Corporation,” he said.

Giving details on government’s next line of action, Mr Oppong Nkrumah said the inquiry will determine the nature of the breaches and advise on suggested next steps.

A second team has been tasked to continue engagement with the American government through its agency the Millennium Challenge Corporation.



This engagement is about the possible next steps after the inquiry and channels for sharing information as part of this inquiry. That team is expected to also be in the USA possibly next week as part of their engagement.

Final efforts to ensure a smooth transition between ECG and PDS officials are proceeding without incident.

Mr. Oppong Nkrumah the breach was discovered by the due diligence of the Ghanaian authorities through ECG and with the support of state agencies.

Initial Due Diligence led by the transaction advisers did not detect anything wrong and second-level checks (this time led by the Ghana side) initially also yielded a response from Al-Koot confirming the guarantee.

It was a third level check by the Ghana side that detected anomalies within Al-Koot thereby triggering a fourth level check.

The fourth level check involved sending an initial team from the Ghana Mission in Qatar to engage with Al-Koot officials for further verification. This fourth level further proved the anomalies and suggested untoward action which is now the subject of the full-scale inquiry.

Government according to the Information Ministry, will update all stakeholders on the outcome of the inquiry and proceed in accordance with law and the terms of the agreement as it works towards a final resolution of this matter.