Whatsup News is picking information that Filipino company, MERALCO caught in the Power Distribution Services (PDS) scandal is planning to pull out its investment from the management concession of Ghana’s electricity distribution utility (ECG).
A Manila-based news portal the Philippines Star (Philstar) reports that owners of MERALCO fear matters resulting in the suspension of concessionaire agreement between the Government of Ghana and Power Distribution Services (PDS).exposes the company to political risk.
“The terms are good, but if we will be exposed to these types of uncertainties, we might as well pull out and just devote our attention to the country. And even in Asia, it’s more stable. Maybe we don’t have the DNA for that kind of risk in Africa yet,” Espinosa is quoted by The Philippine Star.
It quotes the President and CEO of MERALCO, Ray Espinosa as saying the decision to pull out from Ghana will happen unless the political situation of the country improves.
According to the news website, the company fears uncertainties after the forensic audit exposed the PDS fraudulent agreement threatens its investments because MERALCO is not ready to risk in such controversies in Africa and not even in Asia.
PDS is a consortium between Meralco through Meridian Power Ventures Ltd, Angola-based firm AEnergia SA and three Ghanaian firms namely TG Energy Solution Ghana; GTS Engineering Ghana Ltd and TBK Ghana Ltd.
The Meralco-led PDS signed the concession agreement with ECG on March 1, a year after Millennium Development Authority (MiDA) chose Meralco as the preferred bidder for private-sector participation in ECG and the Parliament of Ghana approved the 20-year concession agreement.
Government is already under pressure to abrogate the entire PDS deal after the public became convinced some key government appointees including Finance Minister Ken Ofori-Atta and his cronies may have hoodwinked taxpayers to take over the 24 billion asset ECG.
There is uncertainty about the PDS but deep throat sources say the President, Nana Akufo Addo is considering recommendations to go back to Parliament to seek a consensus on the way forward or call for fresh bids under restricted tender to get new concessionaries to take over the operations of ECG in other not to miss the MCC $500m grant.
The PDS deal broke down when it turned out that Meralco and its consortium of questionable Ghanaian companies have secured fraudulent payment guarantees from Qatar-based Reinsurance Company called Al Koot.
PDS was supposed to raise in excess of US$ 490 million to be matched to the US$ 500 million being provided by the Americans. However, despite clear preferential treatment given the consortium to meet up with their obligations, they failed and were relying on retail funds from electricity consumers in Ghana to raise their part of the obligations.
Forensic investigations by both Ghanaian government officials and a MiDA-contracted forensic investigative company, FIT Consulting has concluded that PDS simply did not show they had the financial commitment to take up the deal.
:……..“PDS is not having a certain level of capital required for the issuance of a cash-backed letter of credit, which was an option offered by some financial institutions that PDS had approached. We were informed during interviews that PDS was offered the opportunity to secure cash-backed letters of credit if it could deposit US$350 million in its bank account,”
This move of Meralco to pull out of the deal is coming in the heels of calls by civil society groups and Energy think-Tanks calling for the immediate abrogation of the contract due to the fraud exposed in the deal. PDS has been fighting back and since the scandal was exposed. It has published what it calls achievements within four months into its operations. These include GHC3.3bn ECG debt reduced by over GHC1bn, upward improvement in operations and revenue generations which it claims is up by 4.87%, from GHC1.86 billion from March to June 2019, compared to GHC1.773 billion the same period last year; a 5.29% rise in power purchase within the same period and 1.32% rise in Energy sales.