PDS agreement was lawfully terminated – High Court

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An Accra High Court has ruled that Government acted lawfully when it terminated its agreement with Power Distribution Services Limited (PDS) regarding the management of the power distributor, ECG.

This is the case in which PDS had contended that the termination of the agreement was unlawful.

Government in July 2018 entered into two agreements that resulted in handing ECG assets worth billions of dollars to PDS. This empowered ECG to undertake the distribution of electricity in the Southern part of Ghana.

This formed part of government’s commitment Millennium Challenge Corporation (MCC) compact with the United States of America requiring that it undertakes private sector participation (PSP) in the energy sector with the object of ensuring efficiency in the management, operation and investments in the electricity distribution business of ECG.

In order for the agreement to take off, PDS had to meet certain conditions, key amongst them being the provision of a demand guarantee or a letter of credit raised by a qualified bank.

Efforts by ECG to confirm the Demand Guarantees issued by ECG resulted in the receipt of a letter dated 16th June, 2019 from Al Koot by which Al Koot denied the validity of the Demand Guarantees.

The Government of Ghana and ECG consequently, by letters dated July 31, 2019, suspended the three agreements pending the conduct of a full inquiry into the circumstances of the letter written by Al Koot.

Upon completion of their investigations, on October 23, 2019, the Government of Ghana acting through the Energy Commission, cancelled the licenses issued to PDS and ordered a transfer of ECG’s assets back to ECG.

In February 2020, PDS dragged government to court claiming reliefs including

“A declaration that the suspension or cancellation of the Operating Licences comprising the Electricity Distribution Licence and Electricity Retail Sale Licence of the Applicant by the Respondent as per its letter dated July 30, 2019, is inconsistent with the condition precedent of prior hearing required by the Energy Commission Act, 1997 (Act 541) and therefore unlawful and void.

A declaration that the purported cancellation of the Operating Licences comprising Electricity Distribution Licence and Electricity Retail Sale Licence of the Applicant by the Respondent as per its letter dated July 31, 2019, contrary to the requirement of prior hearing as stipulated in the Energy Commission Act, 1997 (Act 541) is unlawful and therefore void.

A declaration that the Respondent’s cancellation of the Operating Licences comprising the Electricity Distribution Licence and Electricity Retail Licence of the Applicant as per its letter dated October 23, 2019, contrary to the minutes of Meeting dated September 6, 2019, was unreasonable and in breach of legitimate expectation.

A declaration that the Respondent’s cancellation of the operating licences comprising the Electricity Distribution licence and Electricity Retail Sale Licence of the Applicant and the issuance of new Electricity Distribution Licence and Electricity Retail Sale Licence covering the same Southern Distribution Zone to the Electricity Company of Ghana when a Complaint was pending before the Minister was unlawful and the purported gazetting of the same void as such gazetting and any other publication is proscribed by the provisions of the Energy Commission Act, 1997 (Act 541) and therefore void.

A declaration that the exercise of administrative power by the Respondent in cancelling of Electricity Distribution and Retail Sale licences results from the Respondent’s acceptance of Electricity Company of Ghana’s rendition of the provisions of the Transaction Agreements regarding post-termination transitional period and rights of the Applicant under the Transaction Agreements abridged the Applicant’s rights.

An order of certiorari directed at the Respondent to bring before the Court and quash all unlawful publications made of the issuance of new Operating Licences namely Electricity Distribution Licence No. EC/EDL/02-19-002 and Electricity Retail Sale Licence No. EC/ESL/02-19-002 in the name of Electricity Company of Ghana.

An order directed at the Respondent for the restoration of the Applicant’s Electricity Distribution and Electricity Retail Sale Licences pending the expiration of the post-termination transitional period under the Transaction Agreements or in the alternative compensatory damages for the unlawful suspension and or cancellation of the Applicant’s Licences.

An order of injunction directed at the Respondent and its servants, agents to refrain from interfering with the Applicant’s post-termination transitional rights provided under the Lease and Assignment Agreement (LAA).”

The A-G asserted that most of the reliefs claimed by PDS related to steps taken by the respondent to give the applicant a hearing, before the Government proceeded to take the final decision to cancel the PDS’ licences by a letter dated October 23, 2019, and could therefore not be the object of a relief in a judicial review application.

The High Court presided over by Justice Akua Sarpomaa Amoa on July 2, dismissed all of ECG’s reliefs and indicated that the full reason would be filed in the registry of the court.

Joy News sources say government is set to go after funds belonging to the state which PDS is said to have earlier refused to release.

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