The Electricity Company of Ghana (ECG) will be able to do a good job in terms of power distribution if it is given the same support the government of Ghana gave to the Power Distributive Service (PDS), Dr Kwabena Donkor, the Former Minister of Power, has said.
Dr Donkor told Winston Amoah on the Sunrise show on 3FM Tuesday that: “Basically with the conditions we approved for the PDS, if the same conditions had been approved for old ECG in running the place, their finances would have been better.
“The quarterly tariff adjustment will be cost reflective and commercially profitable….
“We also gave PDS the first call on the Cash Water Fall. If we had done all these and then also with the capital to be injected, with ECG we could have achieved the same or better results. Who was to inject the capital? It was the owner of the entity and the owner of the entity is the Ghanaian State.”
He further said the government should not hastily sign a new agreement as far as power distribution in Ghana is concerned if eventually, the agreement with PDS is cancelled
He said government will need to reflect on the whole agreement and arrive at a better option for the nation.
The government of Ghana recently terminated the concession deal with PDS regarding the distribution of electricity in Ghana.
A letter dated 18 October 2019 and signed by Mr Ofori-Atta, 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, the Government intends to see this PSP through in a manner that respects due process and fidelity to the relevant transaction documents and underlying Compact”.
But when asked by host whether this move by the government was good news for Ghana, Dr Donkor said: “Unfortunately I wouldn’t call it a good news because we ought never to have gotten to that stage. PDS as [put] together could not meet the conditions precedents, they could not provide the needed security prior to taking over our GHS22billion assets.
“The termination when it happens gives us the opportunity to take a step back, it gives us the opportunity [to] pause. First of all, with our immediate PDS experience wouldn’t it be better if we examine other options rather than rush into another decision?
“The Power Sector Reform programme was approved by cabinet as far back as 1995 and the component of the power sector reform programme was the modernization of the ECG in terms of even its structure.
“Under the programme, ECG was meant to have been turning into a Holding Company and then SBU (Special Business Unit) registered as limited liability companies established under the holding company.
“These companies were to be responsible for geographical areas on a commercial basis. Somehow we avoided doing this.
“This what we thought through without any compulsion by any external body but we have not done that.”
Meanwhile the Millennium Challenge Corporation (MCC) has, in a letter to Ghana’s Minister of Finance , Ken Ofori-Atta, requested the government of Ghana to reinstate the Power Distribution Service (PDS) concession right by 30 October 2019.
The US government through the MCC wants government to formally announce the reinstatement of the PDS concession rights after which the MCC “will release to MiDA, tranche 2 funding [190 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 license.
“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.