Published October 22, 2019
11:25am
The Government of Ghana
has terminated the concession agreement with a power distribution utility led
by Manila Electric Co. (Meralco) on allegations of “material breaches.”
Meralco said it
received information that the operation and maintenance concession deal
covering the assets of Electricity Company of Ghana (ECG) has been terminated,
the Philippines’ largest power distribution company, according to a regulatory
filing submitted by Corporate Governance and Compliance head Jocelyn
Villar-Altamira on Tuesday.
The concession was
awarded to Power Distribution Services Ghana Ltd. (PDS) only last March.
PDS is a consortium of
Meralco, through subsidiary Meridian Vetures Ltd., Angolan firm AEnergia SA,
and three Ghanaian firms TG Energy Solution Ghana, GTS Engineering Ghana Ltd.,
and TBK Ghana Ltd.
Meralco controls 30% of
PDS, while AEnergia SA has a 19% stake in the company and TG Energy Solution
Ghana has 18%. GTS Engineering Ghana and TBK Ghana each hold a 10% interest in
PDS.
The termination was
principally due to alleged material breaches in the provision of demand
guarantees by PDS.
“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 said.
The demand guarantees
were key prerequisites and condition for ECG to turnover its assets and
facilities 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,” Meralco
noted.
PDS said it procured
the demand guarantees in good faith and that it knew of no issue regarding the
transaction until the concession was suspended.
PDS was planning to
invest more than $580 million in capital expenditures to operate and manage ECG
and improve the delivery of power services in Ghana, Meralco earlier said. —Ted Cordero/GMA News
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