Meralco, partners to takeover Ghana’s power utility

MANILA, Philippines — Manila Electric Co. (Meralco) and its partners are set to takeover Ghana’s power distribution utility “in the next few weeks.”

Power Distribution Services (PDS) Ghana Ltd. led by Meralco was supposed to start operating the Electricity Company of Ghana Ltd (ECG) at the start of February but regulator Millennium Development Authority (MiDA) has postponed the transfer of assets, according to local reports.

This as the MiDA board decided in a special meeting on Jan. 31 to defer the transfer of assets and operations at a later date.

In doing so, the agency said it has taken note of “the significant progress” made by stakeholders in the process.

“MiDA is confident that the transfer will occur in the next few weeks. The board approved an extension of time to allow the parties and stakeholders, namely Government of Ghana (GoG), ECG and PDS, to conclude their consultations and finalize work on some critical aspects of the transaction, in order to facilitate a smooth transfer,” MiDA said.

The agency said it would announce a new transfer date within the month. “MiDA wishes to assure Ghanaians that it will continue to adhere to, and uphold high standards of transparency throughout the process,” it said.

Based on local reports, PDS will be investing $580 million to turn around the operations of ECG.

Meralco head of legal and deputy general counsel William Pamintuan said investments are mainly to support loss reduction, revenue mobilization, and new connections. 

“These would have to be put in place a few months into the concession as the first few months would be dedicated towards stabilizing distribution utility operations,” he said.

MiDA is the agency which oversees, manages and implements the programs under the Millennium Challenge Account set out by the Government of Ghana and the Millennium Challenge Corp. (MCC).

Last year, the agency chose Meralco as the preferred bidder for the management of, operation of, and investment in the electricity distribution business of the ECG.

Meanwhile, the Parliament of Ghana approved in July 2018 the concession agreement between the government and PDS for private-sector participation in the ECG within the terms of the second MCC.

PDS is composed of foreign firms Meralco (30 percent) and Aenergia SA of Angola (19 percent). The local partners include Santa Baron Ventures Ghana (13 percent); TG Energy Solution Ghana (18 percent); GTS Engineering Ghana Limited (10 percent), and TBK Ghana Limited (10 percent).

At the end of the concession, all assets will be transferred back to ECG.

This is not Meralco’s first overseas venture. In November 2013, Meralco’s partner, Lagos-based Integrated Energy Distribution and Marketing Ltd. (IEDM), took over Ibadan Electricity and the Philippine distribution utility was tapped as technical partner.

Last year, Meralco was invited by Port Harcourt Electricity Distribution Co. to provide technical partnership and service. Port Harcourt is a former state-owned distribution utility which provides power to 14 million customers in four Nigerian states.