After PDS Investigative Reports: Mr. President Your Call(Article)

His Excellency Nana Addo Dankwa Akufo-Addo, President of Ghana

By: Paa Kwasi Anamua Sakyi


The Government of Ghana (GoG) represented by the Electricity Company of Ghana (ECG) and the Ministry of Finance (MoF) on one part, and Power Distribution Services (PDS — a local and foreign consortium), signed the Private Sector Participation (PSP) Transaction Agreements (TAs), which consist of the Lease and Assignment Agreement (LAA), the Bulk Supply Agreement (BSA), and the Government Support Agreement (GSA) on July 3rd 2018. Cabinet on June 14th 2018, considered and approved the Transaction Agreements, and recommended same to Parliament for consideration.

The Transaction Agreements as executed had forty-five (45) Conditions Precedent (CPs) that were supposed to be completed prior to the Transfer Date. CP Nos 24 and 31 required PDS to furnish to ECG an initial Payment Security in the form of either a Demand Guarantee or a Letter of Credit (LC) issued by a Qualified Bank against power purchases and lease payments.

It is reported that due to difficulties with raising a bank guarantee, and in the absence of tariffs set in accordance with the Public Utilities Regulatory Commission (“PURC”) Rate Setting Guidelines, Ghana approved PDS’s request to submit demand guarantees issued by an insurance company.

Prior to the Transfer Date set for March 1st 2019, PDS delivered the Guarantees on February 27th 2019. The main guarantor in a structure consisting of Cal Bank, Donewell Insurance Company Limited (“Donewell”), and JoAustralia Reinsurance Brokers (“JoAustralia”), was Al Koot Insurance and Reinsurance Company S.A.G (“Al Koot”) in Qatar. By a letter dated July 16th 2019, Al Koot denied the existence of valid Demand Guarantees issued in favour of PDS as Payment Security in respect of the LAA and BSA. Al Koot claimed that Yahya Al Nouri, the officer who executed the guarantees on behalf of Al Koot, was not authorized to do so, and that Al Koot was also not authorized to underwrite trade risks. It also claimed that an earlier letter received on March 13, 2019 from Al Koot on the same matter had been forged.

Consequently, GoG acting through the ECG suspended the PDS on the eve of July 30th 2019 for what it calls “fundamental and material breaches of PDS’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction. According to government, it suspended the agreement and its obligations under the transaction in the interest of the public and to protect the assets of the ECG worth over US$4 billion. 


Following Al koot’s forgery claim, the GoG through its Cabinet on 1st August 2019 constituted a team to visit Al Koot in Qatar on a fact-finding mission, with the outcome informing government on the next line of action.

The terms of reference (ToR) for the delegation were to:

  • Ascertain whether Al Koot authorized the issuance of the guarantees on behalf of PDS and in favour of the ECG;
  • Ascertain whether Al Koot issued the type of guarantee PDS presented to GoG;
  • Establish whether Al Koot ever issued any form of guarantee to ECG, and if so, on whose authority this was done;
  • Establish whether Al Koot had a guarantee in place for ECG on March 1st

Few day later, the Board of MiDA also commissioned FTI Consulting, Inc. (FTI), a United States-based consulting firm to probe the deal. The investigation was necessary for MiDA, as it claimed to have received documentation that contradict some of the key assertions in the July 16th 2019 letter from Al Koot.

The ToR was broad, and included but not limited to:

  • Ascertaining the process adopted in procuring the PDS Demand Guarantees;
  • Ascertaining if the process of procuring the PDS Demand Guarantees was compliant with the standard procedure for procuring such Guarantees;
  • Establish whether there an executed Demand Guarantee by Al Koot;
  • Ascertain if there was an insurance premium and if so to whom it was paid, and when.


The Final Summary of Findings Report (“Final Report”) intended solely for the internal use of MiDA, as outlined in the Contract for Consulting Services between FTI and MiDA dated August 16, 2019, was the first to become publicly available early this month — September 2019.

Based on a review of background documents, interviews conducted, and independent investigative analysis performed by FTI, some key observations made by FTI were as follows:

  1. That, there were structural changes made to the original form of the Payment Securities as contemplated in the LAA and BSA, which were approved by the MiDA board on February 21, 2019 — an action that was in line with the prior instructions given by His Excellency the Vice President on February 19, 2019 to authorize PDS to issue the guarantees.
  2. That, on February 28th, 2019, ECG wrote several letters to register their reservations about the structure of the Demand Guarantees, which they said did not conform to the structure agreed to in the LAA and BSA.
  3. That, of the US$12.25 Million that was charged by Cal Bank to PDS as fees for raising the Payment Securities, only USD1 Million (8%) was funded by an equity contribution by a PDS shareholder. US$7 Million (57%) was funded by a loan that was advanced by Cal Bank to another PDS shareholder. This loan was repaid from operating cash-flows generated by PDS after the Transfer Date. The balance of US$4.25 Million (35%) was also paid directly from operating cash-flows generated by PDS after the Transfer Date.

Report of GoG delegation on visit to Qatar, investigating into purported issuance of Demand Gurantees by Al Koot in favour of PDS was the next to become a public document by the second week of September 2019.

The team established including many others that;

  1. There is no valid Payment Security or Demand Guarantee issued by Al Koot in respect of any part of the obligations of PDS under the LAA and BSA, as Al Koot indicated that the records of the company do not show the receipt of any application of such a facility;
  2. The officer who purportedly authorized the guarantees lacked the capacity and did not have the requisite approval to execute a guarantee of such a nature.
  3. There has also not been any payment or receipt of premium by Al Koot, in spite of the vehement assertion to that effect by Jo Australia; supporting the claim of Al Koot about the absence of any valid Demand Guarantee issued by the company in respect of the LAA and BSA.

Mr. President Must Speak

Since the two reports became public documents, there has not been a clear pronouncement from Government or His Excellency the President of the Republic of Ghana on the PDS debacle.

This situation has generated a lot of speculations and accusations in the public domain with some drawing conclusions of collusion, diversions and cover-ups; especially when government is failing to make clear its position on the matter, after the findings from the authorized bodies had been available for weeks.

To some, the two reports have exposed the gargantuan state capture going on. They describe it as a case of “good” governance gone badly in a well thought out state capture scheme by the forces that be in the bid to engage a private sector company as a concessionaire for ECG’s operational and financial turnaround.

The opposition National Democratic Congress (NDC) is accusing government of conniving among themselves to ensure that issues surrounding PDS fade away at all cost, and to enable government create conditions for cronies of the president to profit from a clearly corrupt arrangement.

Some are calling for the abrogation of the agreement after the two separate investigations concluded there was no valid guarantee, which cannot be relied on for the deal. The claim is that, there is no time to point out fingers and/or engage in a blame game, when it is clear PDS does not have the capacity to operate the assets of ECG; having to rely on ECG’s cash-flow to pay shareholders premium to Cal Bank et cetera. Others are also suggesting that the “PDS is a motley crew of persons who should have US$500 million in investment over 5 years, but don’t!”

It is also alleged that the Minority in Parliament is collecting signatures in a bid to recall the House to discuss the matter and understand the authority, the capacity of the Vice-President or the Minister of Finance to vary the express resolutions of Parliament; and accusing government of treating resolutions of Parliament with impunity. 

There are also allegations that there are some facing attempts by the Americans led by the IFC to try to massage the situation and to coerce Ghana to overlook the fundamental breach and gross violation of the LAA, and to let PDS continue its operations and later bring an action against Al Koot.

In order to end all these speculations, accusations and actions, it is of outmost necessity for the President of the country to speak to the matter which have been a public concern since 30th July 2019, now that investigations into the matter is concluded.

Mr. President, Your CALL!

Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security (IES) © 2019

The writer has over 22 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media and CNBC Africa.



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