U.S. aid agency slashes $190 million in compact funding to Ghana
MANILA, Philippines – Washington-based Millennium Challenge Corporation (MCC) approved the termination of $190 million of compact funding to Ghana on November 8, 2019, the foreign aid agency said in a letter to the West African country.
This came after the concession agreement that was supposed to allow a consortium to take over the Electricity Company of Ghana (ECG) was terminated in October.
The consortium was called Power Distribution Services (PDS) Ghana Ltd. It was made up of Manila Electric Company (Meralco) through Meridian Power Ventures Ltd., Angolan company AEnergia SA, and Ghanaian firms TG Energy Solutions Ghana Limited, Santa Power Limited, and GTS Power limited.
MCC was supposed to give a total of $498.2 million to Ghana to help the country build a self-sustaining power sector that will provide reliable and affordable power to nearly 10 million Ghanaians. The compact agreement was composed of two tranches: $279.3 million and $190 million.
Upon signing, $28.9 million was already released to Ghana. MCC said the balance is still intact and that it would be managed and implemented by the Millennium Development Authority (MiDa).
In July, Ghana suspended the concession of ECG, citing that part of the financial transaction of the concession had been fraudulently obtained. However, an independent audit conducted by MiDa showed there was no information to suggest fraud took place in the deal.
MCC Chief Executive Officer Sean Cairncross said the suspension was "unfounded" and that "the rights of Power Distribution Services (PDS) as concessionaire should be restored."
MCC has repeatedly warned Ghana not to end the concession agreement, but Ghana proceeded with the termination last October.
"MCC has determined that by terminating the existing concession arrangement, the Government of Ghana materially breached an obligation under the compact," the aid agency said.
The consortium had been awarded a 20-year concession to take over the operation and management of ECG. Meralco used to have a 30% stake in the consortium prior to the termination, the biggest among all the companies involved. (READ: Meralco a step closer to bagging Ghana power deal)
The concession had been terminated due to alleged material breaches in the provision of demand guarantees by PDS, but Meralco said such claims are invalid.
"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," the utility firm said. – Rappler.com