Meralco said it received information that the operation and maintenance concession deal covering the assets of Electricity Company of Ghana (ECG) has been terminated, the Philippines’ largest power distribution company, according to a regulatory filing submitted by Corporate Governance and Compliance head Jocelyn Villar-Altamira on Tuesday.

The concession was awarded to Power Distribution Services Ghana Ltd. (PDS) only last March.

PDS is a consortium of Meralco, through subsidiary Meridian Vetures Ltd., Angolan firm AEnergia SA, and three Ghanaian firms TG Energy Solution Ghana, GTS Engineering Ghana Ltd., and TBK Ghana Ltd.

Meralco controls 30% of PDS, while AEnergia SA has a 19% stake in the company and TG Energy Solution Ghana has 18%. GTS Engineering Ghana and TBK Ghana each hold a 10% interest in PDS.

The termination was principally due to alleged material breaches in the provision of demand guarantees by PDS.

“Based on the letter signed by Minister Ken Ofori-Atta of the Ministry of Finance of Ghana, the forensic audit by the auditors chosen by the Millenium Development Authority indicated that the purported demand guarantees were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance, Qatari insurance firm, and were therefore invalid,” Meralco said.

The demand guarantees were key prerequisites and condition for ECG to turnover its assets and facilities to PDS.

“The same report also mentioned that there was no information available to forensic auditors to suggest that PDS committed fraud in relation to the demand guarantees,” Meralco noted.

PDS said it procured the demand guarantees in good faith and that it knew of no issue regarding the transaction until the concession was suspended.

PDS was planning to invest more than $580 million in capital expenditures to operate and manage ECG and improve the delivery of power services in Ghana, Meralco earlier said. —Ted Cordero/GMA News