MPS agreement worse than PDS – TUC
The Trade Union Congress (TUC) says the concession agreement between the GPHA and the Meridian Ports Services (MPS) “is probably worse than the PDS agreement”.
According to the TUC, the MPS deal has the potential to collapse viable companies such as Ghana Ports and Harbours Authority (GPHA), terminal operators, Inland Container Depots (ICDs), Ghana Dock Labour Company, stevedore companies and others.
“Ghana cannot afford to mortgage the most lucrative areas of the maritime industry in the hands of foreign companies. We, therefore, call on government to continue to act in the best interest of Ghana,” it added.
The TUC said these in comments it submitted to the Minister of Finance, Mr Ken Ofori-Atta, on the mid-year fiscal policy review of the 2019 budget statement and economic policy.
The largest labour union in the country is of the opinion that government’s plans to sell Thermal Assets could hinder the country’s socio-economic development, cautioning that all such ideas should be aborted.
Government in 2015 negotiated the 35 years contract with the MPS for the development and operationalisation of a multipurpose container terminal at the Tema Port to create a deeper vessel capacity with an accompanying container storage facility as parts of efforts to position Ghana’s ports as a hub within the West African sub-region.
The group further urged government to work with its stakeholders, including labour unions, to ensure that the macroeconomic gains in recent years reflect sufficiently in the lives of all Ghanaians.
“We need to work together to bridge the gap between the rich and poor through the creation of decent jobs and the provision of social services. We must also pay more attention to agriculture and manufacturing,” the statement added.
According to the TUC, the macroeconomic performance in the last couple of years had been very encouraging.
It has aided in the continuous growth of the economy, indicative in the falling inflation and interest rates, the relatively stable exchange rate, as well as the trade and current account surpluses, were all good indications that a solid foundation was being built for further economic growth and prosperity.
However, the TUC wanted the government to implement practical measures to strengthen revenue generation, with focus on making the existing tax regime effective rather than imposing additional taxes, adding that “the tax exemption regime must be overhauled without any further delay.”
Tax revenue is still stuck far below 20 per cent of Gross Domestic Product (GDP), in spite of some gains in recent years. In the first half of 2019, expected total revenues fell short by 15.5 per cent.
The TUC noted that total tax revenue of 12.9 per cent of GDP in a country where GDP was growing at the rate of over six per cent was problematic, saying “Ghana is underperforming in terms of tax revenue collection, compared to Togo, Senegal, Kenya, Burkina Faso and Cape Verde.”
It said the government’s reliance on personal income taxes, corporate taxes, and petroleum taxes as revenue sources was disproportional, saying higher income taxes and petroleum taxes were adversely affecting disposal incomes and living standards of workers and their families.
“Similarly, higher corporate taxes are negatively affecting the ability of businesses to be more competitive and to create more decent jobs,” it said and questioned the status of the draft policy on tax exemptions.
“What is the status of that policy, has it been passed into law, why should we allow tax exemptions to deprive us of much-needed revenue for development,” the TUC quizzed.
On housing, the TUC said the situation in the country required urgent interventions and stressed the need for the government to involve its social partners in the new initiatives.
“A unilateral, top-down, and business-as-usual approach to delivering housing could seriously undermine trust in public interventions. We must work together to ensure that the housing schemes deliver houses that are truly affordable,” the TUC said in its comments.
Suspension of PDS
On 30th July, 2019, government announced the suspension of the Electricity Distribution License and Electricity Retail Sale License issued to PDS by the Energy Commission.
ECG has been authorized by the Energy Commission to take over the distribution and retail of electricity. We understand that government’s decision was based on allegations of fraud which relates to demand guarantees for Lease Assignment Agreement (LAA) and Bulk Supply Agreement (BSA) of the PDS concession.
Even though this is self-inflicted, we commend government for acting swiftly to protect a strategic national asset of a very high value when government had cause to suspect wrong doing in the acquisition of demand guarantees for the LAA and BSA.
We expect government to expedite action on the investigations because if the impasse persists it could affect the efficient delivery of electricity. A transaction of this nature, which affects such a sensitive sector, should have been treated with highest level of care and tact.
The alleged failure of MiDA to verify and ascertain the authenticity of the guarantees submitted by PDS before handing over the assets and business of ECG to PDS will be shocking if it turns out to be true. The role of International Finance Corporation (IFC) of the World Bank, as a transaction advisor in this deal, needs to be properly appraised.
The ownership of the consortium of domestic firms or individuals that are holding 51 percent share in PDS must also be examined properly. Ghanaians need to know all those who were responsible for this botched deal. We wish to remind Government that these developments should not affect the rights of workers of PDS and ECG.
The Trades Union Congress also commented on capital expenditure which it said was dwindling, the agricultural sector which it said was underperforming, public sector base pay which it said had shrunk over time, the Africa Continental Free Trade Area (AfCFTA), that it said had risks which should also be watched as the country took advantage of the protocol as well as other larger macroeconomic issues.