General News of Tuesday, 5 June 2018
Plans by the government to have a private entity manage the affairs of the Electricity Company of Ghana (ECG), as part of a compact agreement with the Millennium Challenge Corporation (MCC), will have to clear another legal hurdle before taking effect.
On June 8, 2018, the Commercial Division of the Accra High Court will rule on an interlocutory injunction seeking to stop the Millennium Development Authority (MiDA), the body spearheading the exercise, from going ahead with the concession process.
The injunction was filed by the BXC Company Limited, one of the companies that lost the bid to manage the ECG under the concession arrangement.
BXC marched to court with the case that it was unlawfully disqualified from the bidding process by the MiDA, describing the disqualification as “arbitrary and without basis.’’
That was after the MiDA announced that it had selected Meralco Consortium to manage the ECG under the compact two power agreement.
Meralco Consortium is led by the Manila Electricity Company from the Philippines.
BXC and Meralco Consortium were the two final bidders after other bidders pulled out of the bidding process.
Conflict of interest
According to its statement of claim, MiDA disqualified BXC on the basis that there were “potential conflicts of interests” because of the existence of prior contracts between ECG and BXC.
But BXC averred that it disclosed to MiDA that it had contracts with the ECG and had also heavily invested in Ghana’s power sector before it submitted its bid.
BXC is, therefore, seeking damages of $4 million, which it contends was “money it expended on preparing and submitting its bid”, as well as an indefinite injunction on the MiDA from going ahead with the concession process.
After filing the writ, BXC also filed an application for interlocutory injunction, which sought to stop the MiDA from proceeding with the concession arrangement until the court determined the substantive case.
Making a case for the interlocutory injunction, counsel for BXC, Mr George Amissah, yesterday told the court that BXC would suffer irreparable damage if the MiDA was allowed to continue with the privatisation process before the determination of the case.
He said the money expended by his client in the bidding process would go to waste, and also the MiDA would get away with the “injustice’’ that his client suffered.
According to Mr Amissah, the MiDA was duty bound to inform BXC the exact conflict of interest that caused the disqualification since BXC had informed it about all the contracts it had with the ECG.
No legal right
The submission of Mr Amissah was vehemently opposed by the counsel for the MiDA, Mrs Victoria Barth, who argued that BXC had no legal right to seek for an injunction of ECG’s privatisation process.
She was of the view that BXC was not chosen as the concessionaire and, therefore, could not seek to stop the privatisation.
“From the moment the MiDA disqualified the plaintiff (BXC), its legal right to seek an injunction had been forfeited,’’ she said.
On whether BXC was disqualified arbitrarily, Mrs Barth said, it could be compensated through damages, if indeed that was the case, but not by placing an injunction on the whole process.
Mrs Barth, however, stated that the disqualification was lawful because it was not just because of the potential or actual conflict of interest.
“BXC also failed to state that it made false claims,’’ she said.
Balance of convenience
Counsel further argued that on the balance of convenience, the people of Ghana would suffer more harm than BXC if an injunction was placed on the concession process.
According to her, the concession process had timelines which must be adhered to before the MCC could release the first tranche of $469m under the compact.
After the arguments, the court, presided over by Mr Justice Jerome Boateng, fixed June 8, 2018 to rule on the interlocutory injunction.
On August 5, 2014, the government entered into an agreement with the USA, acting through the MCC, to make momentous changes in the power sector in Ghana.
Known as the Ghana Power Compact or simply Compact II, the MCC is expected to invest up to US$498.2 million to transform Ghana’s power sector and stimulate private investments.
The BXC case is not the first time the planned private participation in the ECG has come under legal attack.
In November, 2016, the Accra High Court dismissed a case filed by a farmer, Saaka Salia, on the basis that he had no legal capacity to initiate the action.
Another legal action challenging the concession, filed by more than 1,000 workers of the ECG and the Public Utilities Workers Union (PUWU), was also dismissed by the Accra High Court in October, 2017.