Here is why the Ghanaian government suspended the agreement with Power Distribution Services

The Ghanaian government has abrogated the contract with the Power Distribution Services (PDS) barely six months after the company took over from the Electricity Company of Ghana (ECG).

Gov’t suspends PDS agreement; ECG takes over again

The government announced this in the late hours of Tuesday (July 30, 2019).

A statement signed by the Information Minister Kojo Oppong Nkrumah said that “the decision follows the detection of fundamental and material breaches of PDS obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further diligence. 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 statement further said that steps were underway to unveil the details that went into it as the government is conducting a full enquiry into the matter.

According to Ghanaweb, after the transfer of ECG's assets and operations to PDS on March 1, 2019, ECG, acting as the beneficiary of the Demand Guarantees, has subjected the Guarantees submitted by PDS to further due diligence tests.

ECG received a letter from Al Koot, dated July 16, 2019, that claimed, among other things, that the officer who executed the Guarantees from Al Koot was not authorized and that the Guarantees are null and void. The letter also stated that the officer had committed fraud.

This development led to several meetings with officials of the Ministry of Finance and ECG as well as with President Akufo-Addo.

After the meetings, the government decided to verify the information contained in the disclaimer letter by sending a delegation of stakeholders to Doha, Qatar, on Wednesday, July 31, 2019, to meet with officials from Al Koot.

The government, therefore, decided, as a precautionary measure, to suspend the concession agreement with effect from Tuesday (July 30, 2019).

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