Ghana stands to lose over $200 Million from the Millennium Challenge Corporation (MCC) if it fails to nullify by 30th October, the contract of the Power Distribution Services (PDS) Ghana Limited which was terminated by the Ghanaian government via a letter dated March 1, 2019. The Ghanaian government claimed the termination of the contract between the PDS and the Electricity Company of Ghana (ECG) was due to breaches of agreement.
In the said letter, the government of Ghana alleged that the PDS failed to fulfil the necessary “condition precedent” in the agreement, which borders on demand guarantee. The United States government however, is not taking it lightly with the Ghanaian government thus giving them till 30th of October to reverse the decision or face sanctions of losing about 190 million dollars under the MCC Compact II.
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In a letter addressed to Ghana’s Finance Minister dated October 18, 2019, the United States government through the Millennium Challenge Corporation (MCC) asked Ghana to “…reinstate the concession rights of Power Distribution Services Limited (PDS) as contemplated under the agreements governing the ECG-PSP…”. By that, the MCC wants Ghana to restore the lease and assignment agreement, bulk supply agreement and government support agreement which form the PDS-ECG PSP transaction agreement.
It asked the government to restore the PDS-ECG agreement and then restructure same by “facilitating the restructuring of the equity interest of PDS”. Moreso, it has asked Ghana to “maintain the framework and the terms and conditions of the existing transaction agreement unless otherwise agreed to by all parties”.
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MMC is also asking Ghana to maintain Meralco “in its current roles of financial lead shareholder, operation lead shareholder and developing country lead shareholder”.
Ghana government per the letter from the MCC is also to facilitate equity participation of potential Ghanaian institutional investors in the transaction in a fair and transparent manner “while handling the rights of the existing shareholders”. It also noted that the Ghana Infrastructure Investment Fund, the Ghanaian Pension Fund and SSNIT as some of the Ghanaian institutional investors the government could look at.
Consequently, the US government through the MCC wants the Ghanaian government to formally announce the reinstatement of the PDS concession rights by October 30 after which the MCC “will release to MiDA, tranche 2 funding of about 200 million dollars and permit such funding to be committed to approved contracts under the Compact. It has also asked Ghana to cause its Energy Commission to lift the suspension of PDS retail supply licence. Insisting that once this is done, the MCC will authorise the resumption of activities towards the development of a regional compact, which Ghana has expressed interest in benefiting, the letter said. Many in Ghana are not taking this lightly as they see it as arm-twisting tactics being employed by the United States to project its interests ahead of that of Ghana.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.