Lack of bond guarantee hampering ECG takeover – IES
The Institute of Energy Security(IES) has stated that the delay in announcing the takeover of the Electricity Company of Ghana (ECG) by Power Distribution Services(PDS) is due to the latter’s refusal to provide a bond guarantee.
The Millennium Development Authority (MiDA) announced in January that PDS was scheduled to take over ECG on February 1, but the deal was postponed.
The rest are Power Generation Sector Improvement Project and Energy Efficiency, and Demand Side Management Project.
Power Distribution Services whose major shareholder is Filipino company Meralco consortium was expected to take over the ECG on the 1st of February.
The takeover was however postponed by MiDA.
Speaking to Citi Business News on the issue, the Executive Secretary of the IES, Paa Kewsi Anamuah Sakyi disclosed that the refusal of PDS to provide a bond guarantee was the cause of the delay.
He maintained that PDS wants to first takeover the ECG before raising a bond with the assets of the ECG.
“We are getting the indication that Meralco(PDS) is asking to takeover ECG before they present their bank guarantee. In the arrangement, they need to put forward a performance bond that will guarantee that commitment that they have for ECG and the country and whichever part that will be fulfilled”.
He explained that “the performance bond or the bank guarantee is not ready and they(PDS) are seeking to takeover ECG and raise the bank guarantee on the back of ECG.
Mr. Anamuah Sakyi argued that “it is quite unfortunate because any other person can also do the same thing”.
“Why would you want to raise a bank guarantee on the back of ECG? We hope that is not the case. It is a very bad one because a bank guarantee is a condition that should be met before the takeover come into being,” he stressed.
Background
Meralco Consortium won a bidding concession to operate the ECG under the Power Compact Two with the Millennium Challenge Corporation.
Meralco is said to be a major shareholder of Power Distribution Services which was finally announced to take over the ECG
The journey to get a private sector player to manage the affairs of the ECG started after Ghana won the power compact two which is expected to inject some 900 million dollars into the ECG.
Ghana signed the Power Compact with the United States of America acting through the Millennium Challenge Corporation (MCC), an independent United States government agency, on the sidelines of the US Africa Leaders’ Summit in Washington DC on August 5, 2014.
Under the Power Compact, six projects are being 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.
Source; citinewsroom.com
