Introduction
The long and complex dispute between the Electricity Company of Ghana (ECG) and Power Distribution Services Ghana Limited (PDS) has finally been resolved through a legal conclusion. The London Court of International Arbitration (LCIA) has dismissed PDS’s multi-million-dollar claim, ruling essentially in favour of ECG. The verdict spares Ghana and ECG from a potentially massive judgment debt. This report examines the background of the case, the roles of both parties, and the implications of the ruling for future proceedings.
Background
In 2014, Ghana sought a second Millennium Challenge Compact (Compact II) worth $498.2 million from the U.S. Millennium Challenge Corporation to reform its power sector. A key condition was private participation in the management of the Electricity Company of Ghana (ECG).
Despite resistance from ECG workers who feared privatisation, the Millennium Development Authority (MiDA) proceeded to invite bids. Out of over 60 companies, six were selected for shortlisting. After evaluations and legal challenges, the Manila Electric Company (Meralco) from the Philippines was selected.
In July 2018, Parliament approved the concession agreement between the government and a Meralco-led consortium, forming the Power Distribution Services (PDS). PDS officially took over ECG operations on March 1, 2019.
How the dispute began: A privatisation that went wrong
The contract promised private capital, technical know-how, and improved collections. Under the agreement, PDS was to manage the staff and assets of Electricity Company of Ghana (ECG), making new investments and introducing operational efficiencies to improve the reliability of electricity supply in Ghana.
Soon after PDS took over, the government suspended the deal, citing fraudulent demand guarantees submitted by PDS. The guarantees, meant to secure ECG’s interests, were allegedly forged by an employee of Qatar-based insurer Al Koot.
That finding prompted the government to terminate the concession in October 2019. In a subsequent statement, the U.S. embassy in Ghana disagreed with the government’s decision, declaring that an independent forensic investigation had concluded that the transfer of ECG assets to PDS had indeed taken place properly.
PDS’s claim and the arbitration
As a result, PDS responded by suing for wrongful termination. Its claim reportedly ran to roughly US$390 million, a mix of alleged direct costs and lost profits over the life of the contract. The company said the termination deprived it of an opportunity and sought compensation in an international tribunal in London.
The tribunal’s finding and immediate legal effect
After years of proceedings, the tribunal found in favour of ECG, rejecting PDS’s claims in their entirety and upholding the government’s position that the defective guarantees went to the heart of the concession. Practically, the ruling spares Ghana and ECG from having to pay the substantial sum PDS sought, and it affirms that the termination was legally justified.
Response from PDS
PDS, on the other hand, has confirmed the final award by the London Court of International Arbitration (LCIA) and indicated that it will update the public after a review.
Government’s Position
The Ministry of Energy and Green Transition has assured that it is taking all necessary legal and administrative steps to recover any amounts due to the Electricity Company of Ghana (ECG) following the fraudulent contractual arrangement between the power distributor and Power Distributor Services (PDS) Ghana Limited.
Conclusion
The tribunal’s ruling is a decisive legal victory for ECG and the state, as it removes the immediate spectre of a crippling arbitration award. Yet that legal success should be seen as a necessary but not sufficient condition for reform.
