Manila Electric Co. (Meralco) and its partners are cleared from allegations that they have committed material breaches in the concession agreement to operate the Ghana power distribution utility. This is the conclusion that the US government foreign aid agency Millennium Challenge Corp. (MCC) arrived at through its independent audit.
Consequently, this made MCC terminate its $190 million funding for Ghana for scrapping its deal with Meralco and its partners.
According to MCC, in sharp contrast to what Ghana had been accusing Meralco of, there was no information to suggest that fraud has taken place.
As Phil Star reported, Ghana has conducted its investigation of the matter earlier and suspended the concession agreement based on fraud.
MCC, claimed otherwise, and recommended the restoration of the rights of Power Distribution Services Ghana Ltd. (PDS) as concessionaire.
MCC Aid to Ghana Reduced
MCC already told the Government of Ghana several times back in September and October to restore the concession. Repeatedly, MCC stressed that failure to restore would lead to the reduction of compact funding, amounting to a total of $190 million.
Yet, the Government of Ghana refused to heed the recommendation.
Instead, it proceeded to cancel the agreement based on the alleged material breaches that have taken place.
Private sector participation in Ghana’s electricity company is an essential condition of the MCC’s aid to the nation. As such, the agreement’s cancellation led to the ultimate scrapping of the compact funding.
However, MCC also said that it would deliver the remaining balance of compact funding, which the Millennium Development Authority will continue to manage and oversee.
This will ensure that the critical improvements to the infrastructure of Ghana’s southern distribution network will still happen.
MCC still plans to see Ghana increase its reliability and power access in key markets, and have better energy efficiency programs.
The concession agreement that is at the center of all these controversies was signed on March 1. This was after a year after MiDA chose Meralco as the preferred bidder for private-sector participation in the Electricity Company of Ghana (ECG).
At the time, the Parliament of Ghana willingly gave its approval to the 20-year concession agreement.
Manila Electric Co Meant to Do More
Based on the agreement, ECG would lease its assets while also transforming into an asset-holding company.
Meralco meant to do great things.
Meralco has once said it would invest at least $580 million for the company’s capital expenditures.
The money can strengthen the governance, management, and operations of the ECG.
Ultimately, it plans to support the company to become more efficient in delivering power to end-users.
Meralco even committed to the country’s socio-economic growth.
However, Ghana suspended the concession agreement on July 2019.
The termination took place several months after in October.
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