PDS suspension: Meralco wants to pull out of Ghana’s power sector
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, a Manila-based news portal has reported.
The Philippine Star on Friday said a top official of Meralco said the decision to pull out from Ghana will 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.
According to the news website, 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.