By Christian Akorlie, ACCRA Ghana
The United States has cancelled $190 million in grants to
Ghana under the “Power Africa” initiative in response to the Ghanaian
government’s termination of a contract with a private utility provider, the
U.S. embassy said.
The Millennium
Challenge Corporation (MCC), a U.S. government foreign assistance agency,
agreed in 2014 to provide $498 million in funding to Ghana’s power sector to
help stimulate further private investment.
The
financing was the largest by the United States under Power Africa, which was
launched in 2013 by then president Barack Obama and aims to bring electricity
to tens of millions of households in Africa.
One reform
under the agreement involved handing over operations at state-run Electricity
Company of Ghana (ECG) in March to Ghana Power Distribution Services (PDS), a
consortium led by Philippine electricity company Meralco.
But Ghana’s
finance minister informed U.S. officials on Saturday that the government was
cancelling the 20-year concession it had signed with PDS, saying payment
guarantees provided were not satisfactory.
In a
statement on Tuesday, the U.S. embassy said the decision to terminate the
contract was unjustified and that the MCC was therefore cancelling $190 million
in grants.
The remaining
$308 million will still be disbursed.
“The United
States underscores the importance of contract sanctity as essential to a
conducive investment climate and a precondition for inclusive economic
growth,” it said.
Ghana’s Information
Minister Kojo Oppong Nkrumah told reporters on Wednesday that the U.S.
announcement did not represent “a crisis of confidence” between the two
governments.
“It has been
a difference in opinion which we have mutually agreed to respect,” he said.
Meralco did
not immediately respond to a request for comment.
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