Reforms in the power sector were mooted in 1995, when the government of Ghana contracted a Chilean company SYNEX to do a study for reforming the power sector in 1994.

Among the many recommendations, SYNEX suggested the introduction of concession in power distribution.

This was not until August 2014 when former president John Mahama signed a Power Compact agreement with the US govt on the sidelines of the US Africa Leaders’ Summit in Washington D.C The Power Compact II was to support Ghana’s electricity sector with a grant of US$498.2 million. This was to undertake six specific projects through the Millennium Challenge Corporation aimed at addressing the power sector challenges. Among these projects was the Private Sector Participation (PSP) in ECG.

Following this, over 60 companies expressed interest in the PSP in ECG. MiDA shortlisted six. These were
BXC Company Ghana Ltd/Xiaocheng Technology Stock Company Ltd, Manila Electricity Company (Meralco),ENGIE Energie Services S.A, Enel S.P.A, Tata Power Company Ltd and Ch Group/Edf Sa/Lmi Holdings/Veolia Sa.

Per the initial agreement, the concessionaire was to hold 80% stake in ECG for 25 years for the management of ECG. The rest of the 20% was to go to Ghanaians. Fast forward, power changed hands in 2016 december. And in 2017, to fulfill a campaign promise, the terms of the agreement were reviewed; 51% Ghanaian ownership (which was good in my opinion) and 49% foreign ownership.

In the process, some of the big companies with proven capacity withdrew from the bidding process leaving BXC and Meralco. BXC was disqualified on technical grounds. They went to court to seek an injunction on the process but the court dismissed same. At a point, workers of ECG through PUWU also went to court but lost.

With time running out on the Power Compact II, Ghana had limited options if any, so we settled on Meralco and a consortium of Ghanaian investors (whose identities were not known until very recently). This consortium of investors together with Meralco formed PDS Company Ltd.

By January 25, 2019, all parties were supposed to have fulfilled all conditions precedent to transferring the operations on February 1, 2019. Under the agreement, the private partner (PDS) will invest US$580 million into the distribution sector in the first five years while the US govt invests US$498.2 million. Key among the conditions was for Meralco to publish name(s) of local partner(s) in the pre-qualification stages. PDS was also required to show a cashflow of $4 billion over the period. Importantly, PDS was required to submit Demand Guarantees.

On 30th July 2019, government of Ghana suspended the operations of PDS barely six months after signing and taking over. In a statement signed by the Information Minister, government disclosed that “the decision follows the 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 diligence”.

In the last few hours, the identities of people behind the local consortium have started trickling in, most of them, members of the ruling government allegedly associated with the President and Finance Minister. These companies allegedly do not have any capacity and experience in the power industry. As it stands now, ECG is back to managing the country's power distribution while government does further due diligence on documentations presented to Ghana by PDS Company Ltd.

PDS maintains that it acted in good faith at all times. Welcome back ECG.

Credit : Eugene Bawelle