The PURC tariff and the ECG concession – Matters involved and matters arising

Dear countrymen and women, I AM back. When I first wrote, I asked three questions, then the full ten questions with the promise to return if sanity does not prevail. I am forced to return this early because of happenings since I first wrote. The PURC did not issue a tariff as established in the concession agreement before transfer. I have found from my research that two factors account for that: political actor greed, and cowing to political pressure by the PURC.

The first reason is that certain individuals in power are frantically asking the Ghanaian partners of PDS, by insisting, forcing, blackmailing including threats of death, etc., to form an SPV out of the 51% Ghanaian OWNERSHIP OF PDS SO THAT THEY WILL CONTROL BOARDROOM DECISIONS OF THE COMPANY. It is not out of any love for country as alleged by the Finance Minister in his letter to a certain Akoto Ampaw on 27th February this year! That letter will be the focus of a full article one day.

Because the government has not been able to secure control of the PDS boardroom it is doing everything in its power to frustrate the process completing the transfer of ECG operations to PDS. What all must understand is that Ghana committed to not holding any shares in PDS. This was a cabinet decision made in 2016 and affirmed by the new cabinet in 2017. Only 3 changes were made to the original decisions by cabinet on the concession structure, and were announced to the whole country during the May Day celebrations of 2017. The pertinent question is simple and it is that if government has changed its policy position why involve the GIIF Nicodemously, and seek to introduce certain specific Ghanaians in the deal? Why not make it an open, fair, and transparent policy, which will invariably attract the most capable Ghanaians into PDS? The insistence on specific individuals such as a certain Anthony Oteng Gyasi, and others smells bad. I will establish the linkages with evidence (emails, letters, memoranda, agreements, etc.) in my twelfth article;

Why would government, which sought to leave control of ECG to the private sector, for improvements in performance, scheme this? The answer is not farfetched. Certain individuals in power want to control PDS’s procurement. The evidence is in the quantum of supplier’s credit contracts they signed over the eight month period between July 2018 (when they signed the concession agreement) and February 2019, after which they symbolically transferred the operations of ECG to PDS – over $200m. This is staggering given that ECG did not exceed $120m of commitments in any calendar year of its entire 50-plus years of existence. Though the concession agreement forbade ECG from doing any deal, in the transition period that exceeded $10m without obtaining PDS’s consent, they did anyway under political pressure (the contents of those contracts and the individuals behind them will be the focus of my twelfth article). The negative implications on the concession are already evident;

The second reason for government’s stalling is indicated by engagements among several power sector stakeholders, which suggest that the government erred in reducing tariffs in 2018. This made the Ministry of Finance subsidize the sector to the tune of over $500m in 2018. The difficulty of government is that if tariffs were to revert to their pre-2018 levels they would have broken a political promise to reduce them. Since JANUARY 2017 the Cedi has depreciated among others. That alone by the automatic tariff adjustment formula requires tariffs to have changed. We are in the tenth quarter since then but the PURC has not done it once. Are the commissioners competent? Do they, particularly the young ones, not care about their careers?

The PURC has guidelines on how tariffs must be adjusted but has been restrained from using it because of the direction the tariff change will point. That restraint is exercised through its chairman who likes telling untruths to the politicians to gain favour. We should not forget his role in destroying the political career of Boakye Agyarko (as advisor on the Ameri restructuring fiasco). It is known also that the government is contemplating hiring a new consultant to create a new tariff model to ‘reset’ the tariffs, raising questions on the integrity of the commissioners. The commissioners resent that and are fighting back. A certain Ofori Atta and a certain Amoako Tuffuor believe it can be achieved by the end of June 2019. By playing into the hands of the politicians in 2018 the PURC now is forced to defend itself, but the Finance Minister is convinced that the tariff information the commission gave to the government in 2018 was palpably false, and that what they did was an act of political sabotage.

There are dangers inherent in the approach being taken by the government. Changing the tariff model to suit their whims, and setting aside the PURC’s guidelines will require the Ministry of Finance to cough up in excess of a billion dollars in 2019 in subsidies alone! Another outcome could be the PDS experiment unravelling because the foreigners will walk, with attendant claims, and a return to the nation wrecking ECG (free for all government corruption) days too soon!!! These frightful scenarios make me very angry.

Here is my suggestion, which also requires the support of Ghanaians. Government should abandon the ‘new consultant’ model and bite the bullet. It will be harsh for the Ghanaian consumer of electricity but it is better to clear the mess it has created by mismanaging the fix that was successfully introduced recently by the administration that handed over power in 2017. The second recommendation is for the individuals in power to abandon their insatiable greed in this particular case to give the Ghanaian some respite.

I cannot be gagged. If they don’t resolve these problems they are creating themselves, in my third article, I will start publishing the documents I made reference to in my first two articles, and many others.

Ghana deserves better, and that is what I seek. I AM a Ghanaian Citizen, and I am very angry.

I shall return.