President John Dramani Mahama has asserted that the contentious Power Distribution Services (PDS) concession agreement was not fundamentally flawed; rather, it failed due to inadequate management and personal interests that compromised its execution.
During the sod-cutting ceremony for the Multi-purpose Solar Energy Project at the Dawa Industrial Park in Agotor on Thursday, November 6, the President remarked that although the PDS arrangement aimed to introduce private-sector efficiency into Ghana’s power distribution, it ultimately collapsed due to mismanagement.
“I acknowledge that there was an effort to engage the private sector in power utility and distribution. We all recall the case of PDS. PDS was not inherently negative; it was merely mismanaged, and numerous individuals had personal stakes in it. This is the reason for its failure. Nonetheless, there is merit in incorporating private-sector efficiency into public utilities,” President Mahama stated.
His remarks arise amidst renewed conversations regarding reforms in Ghana’s power sector, following the final decision by the London Court of International Arbitration (LCIA), which dismissed all claims made by PDS against the Electricity Company of Ghana (ECG) concerning the termination of their concession agreement.
The PDS agreement, established in 2019 under the Millennium Challenge Compact (MCC) initiative between the Government of Ghana and the Millennium Challenge Corporation (MCC) of the United States, aimed to enhance efficiency and service delivery within ECG.
Under the 20-year concession, PDS was anticipated to oversee ECG’s assets and operations to improve power distribution across the country. However, just months after assuming control, the government suspended and subsequently terminated the agreement upon discovering that the payment guarantees provided by PDS through Al Koot Insurance and Reinsurance Company of Qatar were fraudulent.
Investigations disclosed that the guarantees had not received authorization from Al Koot, a fact that was later corroborated by the Qatari Court of Cassation. The fraudulent documents, which played a crucial role in securing PDS’s financial commitments, ultimately rendered the concession invalid.
Subsequently, PDS initiated arbitration proceedings in London, alleging wrongful termination by ECG and seeking damages exceeding US$390 million. ECG, represented by Omnia Strategy LLP under the leadership of Cherie Blair KC, defended its decision, contending that PDS’s failure to authenticate the guarantees represented a significant breach of contract.
After several years of legal proceedings, the international tribunal rejected all claims made by PDS, determining that the fraudulent guarantees undermined the essence of the agreement and warranted its termination.
In the meantime, the Ministry of Energy and Green Transition has pledged to recover all funds and assets owed to the Electricity Company of Ghana (ECG).
