The US government is threatening sanctions against Ghana over the termination of the controversial Power Distribution Services (PDS) Ghana Limited deal with the Electricity Company of Ghana (ECG).

Government in a letter dated October 18, 2019 to the Millennium Challenge Corporation (MCC) announced the termination of the agreement which came into effect on March 1, 2019, and saw PDS take over Ghana’s major power distribution company, ECG.

The decision, government explained, was prompted by some breaches of the agreement by PDS.

According to the Ghana government, PDS failed to fulfil the necessary “condition precedent” in the agreement, which borders on demand guarantee.

But Ghana’s decision appears not to be sitting well with the US government which has given the Ghana government October 30 to reverse the decision or face the consequences of the decision, which will be to lose 190 million dollars under the MCC Compact II.

US government demands

In a letter addressed to Ghana’s Finance Minister dated October 18, 2019, the MCC asked Ghana to “…reinstate the concession rights of Power Distribution Services Limited (PDS) as contemplated under the agreements governing the ECG-PSP…”

By that, the MCC wants Ghana to restore the lease and assignment agreement, bulk supply agreement and government support agreement which form the PDS-ECG PSP transaction agreement.

It asked the government to restore the PDS-ECG agreement and then restructure same by “facilitating the restructuring of the equity interest of PDS”.

Again, it has asked Ghana to “maintain the framework and the terms and conditions of the existing transaction agreement unless otherwise agreed to by all parties”.

MMC is also asking Ghana to maintain Meralco “in its current roles of financial lead shareholder, operation lead shareholder and developing country lead shareholder”.

Ghana government per the letter from the MCC is also to facilitate equity participation of potential Ghanaian institutional investors in the transaction in a fair and transparent manner “while handling the rights of the existing shareholders”.



It mentioned Ghana Infrastructure Investment Fund, the Ghanaian Pension Fund and SSNIT as some of the Ghanaian institutional investors the government could look at.

Consequently, the US government through the MCC wants government to formally announce the reinstatement of the PDS concession rights by October 30 after which the MCC “will release to MiDA, tranche 2 funding [190 million dollars] and permit such funding to be committed to approved contracts under the Compact”

It has also asked Ghana to cause its Energy Commission to lift the suspension of PDS retail supply licence.

“Once this is done, the MCC will authorise the resumption of activities towards the development of a regional compact,” which Ghana has expressed interest in benefiting, the letter said.