The government terminated the deal following the detection of fundamental and material breaches Power Distribution Services Limited (PDS) has said it is “carefully weighing its options” as far as its response to the Government of Ghana’s termination of its power distribution deal with the private firm, adding that it “continues to reserve all its rights under the transaction agreements and applicable laws to pursue all available causes of action”.
The government terminated the deal following the detection of what Information Minister Kojo Oppong Nkrumah described in a statement he issued on behalf of the government on Tuesday, 30 July 2019, as fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) for the transaction.
“The Demand Guarantees were key prerequisites for the lease of assets on 1st March, 2019 to secure the assets that were transferred to the concessionaire,” the minister’s statement said, adding: “The government is conducting a full enquiry into the matter, and the outcome will inform the next course of action. Government has taken steps to ensure distribution, billing and payment services continue uninterrupted.”
Subsequently, a letter dated 18 October 2019 signed by Finance Minister Ken Ofori-Atta said: “Following consultations with the government, we wish to emphasise that the 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 […]