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.”

He urged Ghanaians to remain calm as the government was poised to get to the bottom of the issue.

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.

“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.

IES

The Institute for Energy Security (IES), for its part, called on the government to disclose fully the details of the beneficial ownership of the Ghanaian companies that had proved to be financially sound.

“We also wish to call for a full enquiry into the circumstances that led government functionaries to ‘bend the rules’ to favour PDS Ghana by waiving some ‘Conditions Precedent’ before the takeover to ‘Condition Subsequent’, which was a serious breach of the LAA,” a statement signed by the Chief Executive Officer of the IES, Paa Kwasi Anamua Sakyi, said.

“Had the Ministry of Energy and others done their own basic ‘due diligence’ based on ‘Conditions Precedent’, we wouldn’t have come to a point where the concession stands suspended over a dubious insurance guarantee which should have come before the takeover,” it maintained.

Parliament

In a related development, the Minority in Parliament has called for the prosecution of persons who led the country to sign the concession agreement with PDS, reports Musah Yahaya Jafaru.

It accused the government of failing to do due diligence in the agreement, which had resulted in an embarrassing situation for the country.

In an interview with journalists, the Ranking Member on the Energy and Mines Committee and Minority Spokesperson on Mines and Energy, Mr Adam Mutawakilu, said persons responsible for the botched agreement must be held liable.

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.