THE government of Ghana has ended the concession agreement with a consortium led by Manila Electric Co. (Meralco) over payment issues.
In a disclosure on Tuesday, the listed power distributor said it received information that the concession for the operation and maintenance of the assets of the Electricity Company of Ghana (ECG) was terminated.
The reason given was the “alleged material breaches” in the provision of demand guarantees by Power Distribution Services Ghana Ltd. (PDS), which are the key prerequisites for the turnover of ECG’s assets and facilities to the latter.
PDS is a consortium made up of Meralco through its unit Meridian Power Ventures Ltd.; Angolan company AEnergia SA; and Ghanian firms TG Energy Solutions Ghana Ltd., Santa Power Ltd. and GTS Power Ltd.
Meralco has a 30-percent stake in PDS, which took over ECG on March 1 after winning a privatization bid.
Under the deal, ECG’s assets would be leased to PDS while the former would become an asset-holding company. Once the 20-year agreement ends, all assets would be returned to the Ghanian firm.
“Based on the letter signed by Minister Ken Ofori-Atta of the Ministry of Finance of Ghana, the forensic audit by the auditors chosen by the Millennium Development Authority indicated that the purported demand guarantees were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance, [a] Qatari insurance firm, and were therefore invalid,” Meralco said.
“The same report also mentioned that there was no information available to forensic auditors to suggest that PDS committed fraud in relation to the demand guarantees,” it added.
PDS maintains that it procured the guarantees in good faith and has no knowledge of any issue with the same until the suspension of the concession.
Ghana’s government suspended the concession to assume the operations of ECG on July 31.
A week later, ECG and PDS reached an interim arrangement in which the consortium would continue providing services related to the sale of electricity to ensure there won’t be any power disruption.
These include meter-reading, billing, bill distribution and reconciliation, revenue collection, new service connections, disconnections and reconnections, and faulty meter replacements.
Meralco shares slid by P1 or 0.27 percent to end at P364 apiece on Tuesday.