Electricity
Electricity

The energy compact between the government of Ghana and the United States Millennium Challenge Corporation (MCC) hangs in the balance over the problematic private sector participation (PSP) agreement between Ghana and Power Distribution Services (PDS).

A letter by the Ghanaian government said the MCC had requested Ghana to take some actions or risked the future of the compact.

“Failing to do that, a de-obligation letter would be issued which would effectively end the compact,” the US partners informed their Ghanaian counterparts.

Although local media publications citing sources within the Ghanaian government said that the management contract with PDS had ended, no official statement from the government directly states so.

The PDS contract, which became effective in March, has been fraught with challenges as the consortium led by Meralco of the Philippines failed to provide demand guarantees for the agreement.

Led by Meralco, a Filipino electricity company, PDS took over the operations of Ghana’s state-owned power utility, the Electricity Company of Ghana (ECG), in March.

The 500 million US dollars MCC-backed private sector participation agreement in the West African country’s power sector management was to see PDS transform the power distribution sector into a world-class one to attract investments into the country.

However, in July, the government announced a suspension of the contract as the Energy Commission had suspended the operating license of PDS and had asked ECG to take over electricity distribution until the government concluded its investigation process.

The BXC Company Limited from China, which was among the initial bidders for the PSP contract, could not complete the process.

Meanwhile, the government of Ghana letter signed by the finance minister Ken Ofori-Atta had recommended a restricted tender process to find a replacement for the ‘untenable’ PDS contract. Enditem

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