The enquiry, to be conducted both within and outside the country,
according to the Minister of Energy, Mr John Peter Amewu, would, among
other things, establish who made false representations to the government
to drive it into the agreement.
Mr Amewu told the Daily Graphic in an interview that the
investigations would last for 30 days, by which time the full facts
would be known and a definite decision taken.
He said a high-powered government delegation had been dispatched to
Qatar to ascertain some facts relating to documentation on the
agreement.
Last Tuesday night the government suspended the concession agreement with PDS Ghana Limited.
Mr Amewu assured the public that the distribution of power would not be affected.
He also indicated that the suspension would neither affect the
Millennium Challenge Account (MCA) compact nor lead to job losses,
adding: “It is only a suspension.
Suspension
A statement signed and issued by the Minister of Information, Mr Kojo
Oppong Nkrumah, said the decision followed the “detection of
fundamental and material breaches of PDS’s obligation in the provision
of Payment Securities (Demand Guarantees) for the transaction which were
discovered upon further due diligence”.
“The demand guarantees were key prerequisites for the lease of assets
on 1st March, 2019 to secure the assets that were transferred to the
concessionaire,” it added.
It said the government had taken steps to ensure that distribution,
billing and payment services were not uninterrupted and assured the
public that the development would in no way interfere with the
distribution of electricity services to customers.
PDS’s response
Yesterday morning, the PDS responded to the suspension and sought to play down any wrongdoing on its part.
A statement the company issued said: ”The PDS has taken note of the
statement issued by the government.... and wishes to state for the
record that it had always acted and would continue to act in good faith
at all times.”
It said the company would go through due process “by complying with
the terms of the transaction agreement executed between it and the
Electricity Company of Ghana, on the one hand, and the government,
through the Ministry of Finance, on the other.
“PDS wishes to assure the Ghanaian public that it will not rush to
put out any information until it has been sufficiently substantiated, in
the interest of safeguarding the transaction and the image of Ghana,”
it submitted.
There were fears within the energy industry that the MCA compact,
under which the PDS agreement was signed, would come under threat
following the development, but Mr Amewu said otherwise.
Ghana signed an agreement with the US government for the release of
$498.2 million to support the transformation of Ghana’s electricity
sector and stimulate private investment.
The first tranche of $308.2 million was released in 2016 and the
country is awaiting the release of the second tranche on the successful
implementation of the first phase.
Per the MCC agreement, the second tranche, amounting to $190 million,
will be released after Ghana meets requirements to access the fund.
Energy think tanks demand investigations
In the wake of the ensuing development, some energy think tanks have
called for full-scale and impartial investigations into the matter to
unravel the circumstances that led to what many have described as “a
grievous embarrassment to the state”.
The Africa Centre for Energy Policy (ACEP) said the situation, if
confirmed by the government’s ongoing investigations, would represent a
significant embarrassment caused to Ghana by the Millennium Development
Authority (MiDA) and the International Finance Corporation (IFC) who
were paid to protect the interest of the country and ensure the
efficient spending of US public funds granted to Ghana.
Subsequently, it said, while “the ACEP commends the government for
quickly mobilising the state apparatus to protect public interest, it
demands the immediate interdiction of the leadership of MiDA to prevent
tampering with evidence that may be necessary to support the case of the
state”.
News conference
Addressing a news conference in Accra yesterday, the Executive
Director of ACEP, Mr Ben Boakye, also called on the government to “cease
the consumption of advice from the IFC on the transaction with
immediate effect. This is because the IFC has proved incapable of
defending the interest of its clients, MiDA and the government”, reports
Charles Benoni Okine.
Finally, he called for an immediate audit of the backgrounds of the beneficial owners of the local partners of PDS.
Using other findings to back his demand, Mr Boakye said: “Today, we
are told that the negligence of MiDA to ensure proper due diligence on
the payment securities provided by PDS has led to likely fraudulent
misrepresentation by the PDS and its guarantors.”
According to him, preliminary information available to ACEP showed
that the insurance provided by PDS had been declared fraudulent by the
Qatar-based Alkoot Insurance.
“While this situation is under investigation by the government of
Ghana, ACEP believes that the contested document could have been deemed
suspicious if MiDA and the transaction advisors (IFC) had showed the
slightest seriousness and placed Ghana first,” he added.
He adduced three reasons to substantiate his assertion:
Reasons
“The requirement of bank guarantee, as prescribed under the
concession, was changed to insurance bond to fit the weak capacity of
the concessionaire to raise the needed bank guarantee,” Mr Boakye said.
That, he explained, was in breach of the requirement approved by
Parliament to securitise the ECG’s assets worth $18 billion, in
compliance with Schedule 10 of the Lease and Assignment Agreement (LAA).
“It is, therefore, unthinkable that MiDA and the IFC would bend the
processes to suit PDS, knowing that the effect of a bank guarantee and
an insurance bond are not the same.
“While the bank guarantee can be called upon without recourse, the
same cannot be said of the insurance bond. Secondly, the $350 million
insurance bond produced by PDS was signed by only the managing director
of the issuer.
“While the bank guarantee can be called upon without recourse, the
same cannot be said of the insurance bond. Secondly, the $350 million
insurance bond produced by PDS was signed by only the managing director
of the issuer.
“It has emerged that the MD’s signature was forged, an issue that
raises significant questions about why nobody detected that a
transaction of this scale should have adhered strictly to the procedures
of the issuer and corporate governance principles requiring the
signature of at least one additional board member.
“ACEP has sighted Alkoot Insurance’s response to the ECG
acknowledging that the MD could not have had the sole capacity to sign
the guarantee. Yet, the IFC and MiDA did not detect this,” Mr Boakye
noted.
The third reason he adduced was that persistent cautions by the ECG on the weaknesses of the bond issued were ignored.
“Perhaps the ECG was seen to be a detractor of the concession process
and not a relevant party interested in properly securitising the assets
of the company. Eventually, the ECG is the one that managed to unravel
the alleged fraud,” he stated.
He also questioned how PDS and the local insurance company, Donewell,
could not know the capacity of the individuals they worked with in
Alkoot Insurance in Qatar
“While the bank guarantee can be called upon without recourse, the
same cannot be said of the insurance bond. Secondly, the $350 million
insurance bond produced by PDS was signed by only the managing director
of the issuer.
“It has emerged that the MD’s signature was forged, an issue that
raises significant questions about why nobody detected that a
transaction of this scale should have adhered strictly to the procedures
of the issuer and corporate governance principles requiring the
signature of at least one additional board member.
“ACEP has sighted Alkoot Insurance’s response to the ECG
acknowledging that the MD could not have had the sole capacity to sign
the guarantee. Yet, the IFC and MiDA did not detect this,” Mr Boakye
noted.
The third reason he adduced was that persistent cautions by the ECG on the weaknesses of the bond issued were ignored.
“Perhaps the ECG was seen to be a detractor of the concession process
and not a relevant party interested in properly securitising the assets
of the company. Eventually, the ECG is the one that managed to unravel
the alleged fraud,” he stated.
He also questioned how PDS and the local insurance company, Donewell,
could not know the capacity of the individuals they worked with in
Alkoot Insurance in Qatar
He accused the government of failing to take advice on the agreement, which had led to the current situation.
He said when the PDS took over, it could not bring about any changes
and that everything was left in the hands of the ECG to manage.
He said after ratifying the agreement, the expectation was that the
government was going to take steps to protect the interest of the people
but, unfortunately, it had not done that.
For his part, the National Democratic Congress (NDC) Member of
Parliament for Bongo, Mr Edward Bawa, blamed the government for failing
to ensure due diligence before striking the agreement.
Mr Bawa, who was a communications consultant to the Energy Ministry
in the erstwhile NDC government, said the deal was entered into in a
rush.
According to him, the latest development was an embarrassment to Parliament which ratified the arrangement
