Political risks dampen Meralco zeal for Ghana power project

By Lenie Lectura – September 23, 2019
from Business Mirror

A TOP official of the Manila Electric Co. (Meralco) said the utility firm may opt to discontinue its investment in Ghana due to political risks.

The deal is still on for now, Meralco President Ray Espinosa said.

Hindi (No),” Espinosa said when asked if Meralco has decided to withdraw from the concession agreement. “Naghihinay lang kami (We’re in a waiting mode). It’s a Ghana government issue.”

Meralco’s concession for the operation and maintenance of the assets and facilities of the Electricity Co. of Ghana (ECG), which was awarded to the Power Distribution Services Ghana Ltd. last March 2019, was suspended by the government of Ghana effective July 31, 2019. Alleged material breaches in the provision of the demand guarantees by PDS were cited as reason.

Meralco leads the consortium with a 30-percent stake in PDS, which takes over the operation and management of state firm ECG for 20 years.

Personally, Espinosa said he is slowly losing interest because Meralco had offered the best terms and yet the government of Ghana suspended the concession agreement.

“We’re exposed to political risk, ang layo layo pa (and to think  it’s so far). So, maganda naman yung aming terms [our terms are good], but if we will be exposed to these types of uncertainties, we might as well pull out and just devote our attention to the country.

And even in Asia, it’s more stable. Maybe we don’t have the constitution or the DNA for that kind of risk in Africa, yet. But that’s where it stands today,” he said.

PDS is composed of Meralco, through Meridian Power Ventures Ltd., AEnergia SA, an Angolan company and three Ghanaian firms—TG Energy Solutions Ghana Ltd., Santa Power Ltd. and GTS Power Ltd.

Meralco had said it is currently coordinating with its local partners in PDS to obtain more information and clarification on this matter, and will fully cooperate with the Government of Ghana to address any issue affecting the same.

The consortium had planned to invest more than $580 million for capital expenditures and is expected to strengthen the governance, management and operations of the ECG, and improve the delivery of power to end-users, as well as support Ghana’s socioeconomic growth.

Of that total amount, Meralco’s share may amount to $40 million over five years.

The bid of PDS included equity ownership and management of the concession company that will take over ECG, which supplies 80 percent of the population of Ghana through 3 million accounts.