Trouble Brews Over US$500 Million ECG Concession Already

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ACEP Wants Local Firms Probed

Parliament yesterday, approved the concession agreement for the Electricity Company of Ghana (ECG) under the Millennium Challenge Compact (MCC), but the House appears to have done a shoddy job and the coming days promises to reveal how Ghanaians, have been shortchanged.

The American embassy is likely also to flag the deal and might get mad at the Akufo-Addo government over the lack of transparency in how the concession was finally cooked and dished out in a tainted.

Although, the approval gives a legal basis for private sector participation in the company, but the American government is most like to be invited to thoroughly investigate the transaction particularly the shareholders.

The Herald’s independent investigations into the US$500 million deal signed by the Government of Ghana, revealed five shareholders available to The Herald are: Anergia SA of Angola has 19percent, GTS Engineering LTD a Ghanaian company has 10 percent, Manila Electric a Philipino company has 30 percent.

The two others are Santa Baron Ventures  a Ghanaian company with has 13 percent and TG Energy Solutions another Ghanaian hold majority shares of 28 percent.

The agreement between Philipino company, Meralco Consortium, and the government of Ghana was laid before Parliament earlier this year by the Energy Minister, Boakye Agyarko.

As part of the agreement, the concessionaire will invest over US$ 580 million over a 5-year period into the ECG to improve on the performance of the company.

Millennium Development Authority (MiDA) in May 2018, selected Meralco Consortium which is led by the Manila Electricity Company (Meralco) to manage ECG after determining it to “have the highest combined technical and financial score.”

The announcement followed the disqualification of some investors, who expressed interest, including BXC Consortium.

Per the compact, the MCC, is expected to inject about $418 million into ECG, while Meralco, will invest about $580 million.

BXC Consortium’s attempt to stop the concession process did not succeed as the Commercial Court in Accra dismissed an interlocutory injunction it brought before it to stop the Millennium Development Authority (MiDA) from continuing the process.

Already, the African Centre for Energy Policy (ACEP) has said that Meralco Consortium, which was selected by the MiDA to manage the ECG, did not fulfill the 51 percent local content requirement before its approval.

The government, had introduced a new policy which required any company that wins the bid to have a 51 percent Ghanaian ownership in the structure of the concession, and the Executive Director of ACEP, Benjamin Boakye, though Meralco, later presented a group of Ghanaian companies as its partners the revelation that it did not fulfill the requirement raises serious questions about the selection process.

The Ghana Power Compact and the MCC of United States government agency, signed the agreement on the sidelines of the US Africa Leaders’ Summit in Washington on August 5, 2014.

“We realised that the company, Meralco has not really satisfied the local content requirement of 51% but they eventually emerged as the winner and were subsequently allowed to put together a consortium to take over ECG. That raises fundamental questions because through the request for qualification, there was a specific criterion to be met by any company that was interested in ECG. But if we now have a consortium that did not go through that process how do you satisfy that.

Do you ask them to go through all the requirements that people were disqualified for or you’ll allow them to go on the back of Meralco’s pre-qualification to the post arrangements of the bid processes?  How guaranteed are we that these local people that have been brought on board are actually qualified to manage ECG in a way that assuages every fear that we will have an efficient system and a company that is capable of delivering on the terms of reference that will be agreed.”

Benjamin Boakye, also demanded that Parliament probe the companies that make up the Consortium which is led by the Filipino firm, Manila Electricity Company.

According to him, it is vital that the companies are thoroughly screened to ensure that they are financially and logistically capable of managing the country’s premier electricity distribution company.

“Parliament will now have to demand the background of these companies that have been inserted into the arrangements. Let’s screen them properly to make sure they are companies of sound footing, sound background because they didn’t go through the criteria that would have determined their qualification and competence to be part of the arrangement. So we have to now screen them properly and make sure that these are companies of good standing that can raise the money to be able to partner Meralco.

“If these happen to be companies that have been pushed to Meralco just to satisfy the local content requirement, it may threaten the successful implementation of the programme. If there’s a cash call and they aren’t able to raise the 51% financing required, it will just mean that politics-as-usual will continue in the management of the distribution sector which will not inure to the benefit of the ordinary consumer.

The Public Utility Workers Union (PUWU), has also accused MiDA and government, of excluding them from the Evaluation Panel during the last round of negotiations that led to the selection of the concessionaire, Meralco.

Speaking to Citi News, the General Secretary of PUWU, Michael Adumattah Nyantakyi, said they find this very strange.

“This whole process, we learned that ECG which is the subject of the whole concession was not even represented on the evaluation panel. So we think something is very wrong because the people who are the asset owners, those whose assets you are going to give out to a concessionaire does not have a say or even appraising who is going to take over the asset.”

President Akufo-Addo, during the 2017 edition of May Day celebration, announced that government would stand by a decision to amend the Private Sector Participation (PSP) agreement of the ECG with the Millennium Challenge Corporation (MCC).

Under the original agreement signed by the erstwhile John Mahama government, the Power Compact II, was expected to allow about 80 percent private sector control in ECG for the country to benefit from a total cash injection of about one billion US dollars over a period of 5 years.

But Nana Akufo-Addo maintained that government wants more than the 20 percent control agreed by the former government.

The compact was renegotiated to allow 51 percent local private participation and duration of control reduced from 25 years to 20 years.

Under the Power Compact, six projects will be implemented to address the root causes of the unavailability and unreliability of power in Ghana

The project include ECG Financial and Operational Turnaround Project, NEDCo Financial and Operational Turnaround Project, Regulatory Strengthening and Capacity Building Project, and Access Project.

The rest are; Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project,.

The Government of Ghana, signed the Ghana Power Compact with the MCC, an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington on August 5, 2014.

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