Ghana: PDS concession suspension provides setback for power sector
27 August 2019
The reform of the Ghanaian power sector has suffered a setback after the Lease and Assignment Agreement between electricity distribution utility Electricity Company of Ghana (ECG) and new power retailer Power Distribution Services (PDS) was suspended in July following allegations of fraud.
Qatari insurer Al Koot, which provided PDS with its demand guarantee, is reported to have told ECG that the guarantee was signed by an employee without the authority to do so. Al Koot therefore declared the agreement null and void.
Following the allegation, the Energy Commission in July announced that an interim agreement is in place whereby ECG will reassume the role of electricity retailer pending an investigation.
The PDS concession, awarded to a consortium of local companies led by Philippines’ Meralco, was a key component of the £498.2m Millennium Challenge Compact II (MCC II), signed in 2014 between the Ghanaian government and the US’ Millennium Challenge Corporation.
Constrained power supply
Research carried out by African Energy for its Ghana Power Report 2019/20shows that after years of insufficient generation capacity, the addition of emergency power plants, while costly, has led to an oversupply of almost 1.9GW at end-2018.
There are questions, however, as to whether this oversupply is felt. Inadequate gas infrastructure and technical losses across the transmission and distribution (T&D) networks are major constraints to generation. To address this, the African Development Bank (AfDB) and the World Bank Group have provided support (totalling around $88m) for programmes aimed at strengthening T&D infrastructure by 2022.