PDS suspension in public interest - President Akufo-Addo
President Nana Addo Dankwa Akufo-Addo has justified the suspension of the PDS power agreement.
In his first public comment on the matter, he said the government suspended the agreement in the interest of the public and to protect the assets of the Electricity Company of Ghana (ECG) worth over $3 billion.
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According to President Akufo-Addo, the decision to make the suspension of the PDS agreement public was “for the country to know exactly what is going on, and, therefore, hold the government to account for its stewardship.”
The President made the point when he addressed members of the Ghanaian community in Angola last Thursday.
President Akufo-Addo, who was in the southern African country on a two-day official visit, explained that his government inherited an arrangement in which the United States government, through the Millennium Challenge Corporation (MCC), offered the country $500 million for the reform of the energy sector.
“It was decided to incorporate it largely into the reform of the Electricity Corporation of Ghana. One of the conditions of the money was that we should get a private electricity coordinator to partner the nation to manage our electricity generation and distribution system,” he said.
President Akufo-Addo stated that, “After a process of bidding and tendering which left us with one company in the field, an arrangement was made for that company to take over the running of the assets of ECG.”
“Subsequently we discovered that some of the financial instruments the company put in place were not in order, and, as a result of that, we have had to suspend the concession until all the facts are established,” he added.
Guarantee
The President explained that a fundamental part of the agreement required that the PDS put up a guarantee to cover some $400 million but it turned out that there were problems with this guarantee.
“Therefore, the protection that we should have in the transaction was not really there.
“The matter came to our notice, and we decided that the first thing to do was to protect the public assets by suspending the agreement with this private sector operator and returning the assets to the control of the ECG whilst a process of investigation was being carried out,” he said.
Delegation
President Akufo-Addo told the gathering that he sent a delegation to Qatar, the origin of the guarantee, on August 6, 2019, to find out exactly what the situation was.
“They (Ghanaian delegation) met them (Al Koot Insurance and Reinsurance). They are on their way back. By the time I get back to Accra (yesterday), we will know exactly where we are,” he said.
ECG assets
Emphasising the importance the nation attached to the ECG assets, the President said: ”These are not assets that you can take lightly.”
He said the government took back the assets to protect the public interest “and to make sure that the delinquency, if that is what it turns out to be, was nipped in the bud as soon as possible.”
He gave an assurance that the suspension of the agreement with PDS “will not disturb the flow of electricity in the country. Things will continue on a stable basis,” he said.
Background
On Tuesday, July 30, the government of Ghana announced that it had suspended the concession agreement with PDS.
The government explained in a statement that PDS’ concession agreement was suspended after the government discovered some breaches in the company’s obligation in the provision of Payment Securities.
The PDS, in a response to the government, indicated that it would not rush to put out any information until it had been sufficiently substantiated, in the interest of safeguarding the transaction and the image of Ghana.