Meralco to pull of PDS partnership over ‘political uncertainty’
Manila Electric Co. (Meralco), the Philippino company that is part of the companies in charge of power distribution, is planning to pull out its investment from Ghana’s electricity distribution utility, due to political uncertainties over the Power Distribution Services (PDS) transaction, a Manila-based news portal, has reported.
Although it is not clear how much Meralco, has pumped into the PDS transaction, The Philippine Star on September 23, 2019, said a top official of Meralco, said the decision to pull out from Ghana would happen, unless the political situation in the country improves.
“We’re still waiting for developments. It’s a Ghana government issue,” Meralco President and CEO Ray Espinosa is quoted by the news portal.
Meanwhile, The Herald has also picked up signals that the owner of Aenergy, another partners in the PDS from Angola – Ricardo Machado, a Portuguese entrepreneur who lives in Angola and very close to an in-law ex-President Dos Santos of Angolan might be having some financial challenges hence unable to help raise funds for the Bank Guarantee which later became Insurance Guarantee.
It is unclear, why the company has been named Aenergy SA, in Ghana. It is just about 5 years with its major project outside Angola as the PDS Consortium although there plans by the company to start a project in Cameroun.
Ricardo Machado, who Founder and CEO of Aenergy boasted in 2018 of having over US$700 million which its ready to invest in its projects across the globe especially Africa, but it is not clear how much money it has invested in the PDS deal for the 19% stake it was offered.
However, the Philippinonews website reports that, the CEO of Meralco; Espinosa fears that the Meralco deal is exposed to political risk, following the suspension of concessionaire agreement between the Government of Ghana and Power Distribution Services (PDS).
“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.
Government of Ghana in July suspended the concession for the operation and maintenance of the assets and facilities of the Electricity Company of Ghana (ECG) awarded to PDS.
PDS is a consortium between Meralco through Meridian Power Ventures Ltd. (30 percent), Angola-based firm AEnergia SA (19 per cent), and three Ghanaian firms namely TG Energy Solution Ghana (18 per cent); GTS Engineering Ghana Ltd. (10 per cent), and TBK Ghana Ltd. (10 per cent).
The suspension order was due to alleged material breaches in the provision of the demand guarantees by PDS, which were key prerequisites for the turnover of the assets and facilities.
But a week after the suspension, ECG and PDS agreed on an interim arrangement where the Meralco-led consortium would still continue activities related to the retail of electricity to ensure continued power supply and service to consumers.
These activities include meter reading, billing, distribution of bills, bill reconciliation, revenue collection and new service connections.
It would also still be responsible for disconnections and reconnections, faulty meter replacements, network faults and repairs, complaints and fault reporting to the call centers, and any other related service.
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.
Under the agreement, ECG’s assets would be leased to the PDS for 20 years, while the ECG would become an asset holding company.
Meralco said the PDS Consortium has planned to invest over $580 million for capital expenditures to strengthen the governance, management and operations of the ECG and improve the delivery of power to end-users as well as support Ghana’s socio-economic growth.
After the end of the concession, all assets would be transferred back to ECG, it said.
Before the latest announcement, Meralco, had through its senior vice president and chief legal counsel William Pamintuan said the PDS partners had appeal against the suspension of the power distribution deal in Ghana to have it lifted.
Same news portal reported in August that “Meralco is currently coordinating with its local partners in PDS to obtain more information and clarification on this matter and will fully cooperate with the government of Ghana to address any issue affecting the same,” Meralco senior vice president and chief legal counsel William Pamintuan said.
The suspension took effect on July 31 as announced by Ghana’s Information Ministry.
“The demand guarantees were key prerequisites for the lease of assets on March 1, 2019 to secure the assets that were transferred to the concessionaire. The government is conducting a full enquiry into the matter, and the outcome will inform the next course of action,” the agency said in a statement.
In a briefing yesterday, Metro Pacific Investments Corp. president and CEO Jose Ma. K. Lim said they are confident the issue would be addressed. MPIC is the parent firm of Meralco.
“Our JV partners assured us they can explain the matter (to the government) so we are confident it will be lifted,” he said.