Court throws out PDS in ECG assets management case
The PDS among other reliefs, wanted the court to quash the decision of the Energy Commission to cancel its operating licences and declare it as null and void
The Accra High Court(Commercial Division) has dismissed an application filed by the Power Distribution Sevices (PDS) to challenge the cancellation of its operational licence subsequent to terminating its management of the Electricity Company of Ghana’s assets through a concession agreement.
The government of Ghana was dragged to the court by the PDS last year by a judicial review application that sought to quash the cancellation of its operational licence by the Energy Commission acting for the government.
The PDS among other reliefs, wanted the court to quash the decision of the Energy Commission to cancel its operating licences and declare it as null and void, and also quash the decision of the commission for it to transfer the assets back to the ECG.
However, the Attorney General among other positions, argued the action by PDS was incompetent procedurally arguing that PDS should have first complained to the Minister of Energy for redress before heading to court per the Energy Commission Act, 1997 (Act 541),.
Justice Akua Sarpomaa, who presided over the case however threw out PDS’ application last Friday subsequent to dismissing all their reliefs thereby upholding the case of the Attorney General of the Republic.
The judge did not give full reasons for the above decision but hinted at giving them in her full ruling.
Background
PDS concession agreement was for private sector participation(PSP) in ECGs assets management.
In order for the Government of Ghana to access $498 million power compact from the US government under the Millennium Challenge Compact II, the government wanted to make the utility provider more efficient as a condition precedent, through the PDS concession.
The concession bid was won by Meralco of the Philippines, which came together with a group of companies including local firms to form an SPV(special–purpose vehicle) as a way of satisfying the local content requirement of the transaction.
The ECG, therefore, signed two agreements with PDS in July 2018. They are the Lease Assignment Agreement and a Bulky Supply Agreement.
Whereas the LSA allowed the PDS to manage ECGs assets worth more than $3 billion, the BSA enabled the PDS to fully take over the electricity distribution in the southern distribution zone of the country.
The PDS was mandated to secure payment security as a form of insurance as a condition precedent to managing ECG’s assets.
However, PDS presented payment security in the form of demand guarantees from a Qatar-based insurance firm, Al Koot.
The government, therefore, accused PDS of securing a fake demand guarantee and begun to raise red flags about the agreement in 2019.
The government thereby terminated the concession agreement with PDS in October 2019, after its checks revealed that Al Koot had not issued to PDS any demand guarantee.
