October 23, 2019 | 12:03 am
MANILA
ELECTRIC Co. (Meralco) said on Tuesday that the concession for the operation
and maintenance of the assets of the Electricity Company of Ghana (ECG) has
been terminated by the Ghanian government.
The concession, which
was suspended by the government of Ghana effective July 31, had been terminated
due to alleged “material breaches” in the provision of the demand guarantees by
the Power Distribution Services Ghana Ltd. (PDS).
PDS is the special
purpose vehicle created by the consortium that won the privatization bid where
Meralco has a 30% minority stake.
“Based on the letter
signed by Minister Ken Ofori-Atta of the Ministry of Finance of Ghana, the
forensic audit by the auditors chosen by the Millenium Development Authority
indicated that the purported Demand Guarantees were issued without due
authorization and in excess of the mandate of Al Koot Insurance and
Reinsurance, Qatari insurance firm and were therefore invalid,” Meralco told
the stock exchange.
“The Demand Guarantees
were key prerequisites and condition precedent for the turn-over of the assets
and facilities of ECG to PDS. The same report also mentioned that there was no
information available to forensic auditors to suggest that PDS committed fraud
in relation to the Demand Guarantees,” it added.
Meralco said PDS had
maintained it procured the demand guarantees in good faith and that it had no
knowledge of any issue until the suspension of the concession.
Meralco’s disclosure
comes months after it announced that the assets and operations of ECG had been
handed over to the consortium in which it has participation.
PDS was created by the
consortium between Meralco through Meridian Power Ventures Ltd., AEnergia SA,
an Angolan company, and three Ghanaian firms, namely: TG Energy Solutions Ghana
Ltd., Santa Power Ltd. and GTS Power Ltd.
The supposed handover
came after the award to the PDS consortium as the electricity service provider
in all of ECG’s operational areas in the southern distribution zone of Ghana,
under a 20-year concession agreement approved by the government.
Meralco previously said
the PDS consortium intends to invest $580 million as capital expenditure.
On Tuesday, shares in
Meralco traded lower by 0.27% to close at P364 each.
Meralco’s controlling
stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary
MediaQuest Holdings, Inc., has interest in BusinessWorld through the
Philippine Star Group, which it controls. — Victor V. Saulon
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