EDF, a French electricity conglomerate and Veolia, a French transnational company, together with their local partners CH Group, which are bidding for the ECG Concession, have allegedly rejected government’s policy to allocate a 51 percent mandatory ownership of the ECG Concession to Ghanaian companies.
In a letter dated 12th February, 2018 and signed by Kevin Dadzie of CH Group, addressed to the Chief Executive Officer (CEO) of MiDA, Martin Enson Benjamin and copied to the Board Chair, Prof Yaa Ntiamoa-Baidu, EDF and Veolia are quoted as protesting the latest local content policy direction under the amended RFP aimed at encouraging Ghanaian companies and entrepreneurs to be majority owners of ECG.
In the said letter with a sub-heading, “Structuring consideration in respect to Newco EDF and Veolia were cited as saying, “We are writing on behalf of the consortium comprising CH Group Ltd, EDF and Veolia Africa, to express our significant concerns regarding the Newco structuring requirements as set out in the amended Request for Proposals, dated 29 November 2017 (the ‘Amended RFP’).”
The latest amendments under the amended RFP introduced mandatory 51% Ghanaian ownership (ultimate legal and beneficial ownership by Ghanaian citizens) express restrictions on creating different categories or classes of shares in Newco; requirement for the 51% threshold to be maintained for the duration of the concession and a potential company, in event of default, triggering the default Buy-Out-Option, if this 51% threshold is not maintained.
According to them, the above requirements significantly impacted the ability of their consortium to structure a workable solution.
They further stated that their financiers had advised them that such restrictions would ultimately impact the bankability of the concession.
They further stated in the letter on page 3 that “As part of the security package, which will necessarily compromise any financing package, the 51% restriction is again problematic, severely restricting the enforcement right of the lenders and negatively impacting on the bankability of the concession as a whole.”
“The stance being adopted by the French-led group was effectively a suicide note, which was tantamount to self-exclusion from the bidding process,” said the Ghanaian Consortium.
“And it was inexplicable why the group was seeking to withdraw from the process at this late stage. One can only speculate that the vestiges of foreign domination and control of key infrastructure assets in developing countries or countries in transition could be at play. It’s interesting to note that this same EDF/Veolia are under severe stress in Gabon for failing to perform according to the terms and conditions of a similar electricity and water concession they operate in that country with a population of less than 3 million.
These challenges have forced the retrenchment of staff working under the concession, with the Government of Gabon set to cancel the current concession arrangement. It may therefore, be good riddance for them to exclude themselves from the concession process in Ghana, a country with a population of over 25 million.
“In order not to jeopardise this $500m deal, MIDA and GoG should stand firm and see the selection process through to its logical conclusion and ensure that the 51% mandatory local content for the ECG concession is not compromised, it added.
“Ghanaian entities have the ability to raise local and international capital to meet the investment requirements for the concession and to suggest otherwise in this modern world where capital is free-flowing and looking for a good home is rather child’s play. It is fervently hoped that MiDA and MCC and the GoG will push ahead with the selection process and award the concession to the most capable entities who are still left in the race and who are willing to play by the rules in the interest of the good people of Ghana. Those who wish to exert external influence on the process because of their pompous colonial antecedents should not be given the air to fan their flames of arrogance.
“Local and international partnerships in developing, financing and operating strategic infrastructure assets in Ghana for the promotion of energy security and efficiency is very welcome, however the ability to achieve this should not be the preserve of any specific foreign groups.
“We all should acclaim the ownership of key infrastructure assets in Ghana by Ghanaians as a sine qua non, and indeed throughout history no country has ever been developed by another country so it is imperative for us to take control, build capacity and manage our own affairs. This is in line with the local content policy introduced and the government must be commended for such a bold move,” the Ghanaian Consortium added.
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