The United States has cancelled $190 million in grants to Ghana under the “Power Africa” initiative. This move was in response to the Ghanaian government terminating the contract with a private utility provider, according to the US embassy.
A US government foreign assistance agency, the Millennium Challenge Corp (MCC), agreed to a $498 million funding to Ghana’s power sector in 2014 to promote further private investment.
Ex-President Barack Obama initiates Power Africa in 2013, which aims to bring electricity to millions of households in Africa.
Ghana’s finance minister informed US officials on Saturday that the government was cancelling the concession due the unsatisfactory payment returns.
On the other hand, the US embassy said the decision to eliminate the contract was unjustified and that the MCC therefore will cancel $190 million in grants, said in a statement on Tuesday.
Meanwhile, the remaining $308 million will be disbursed.
“The United States underscores the importance of contract sanctity as essential to a conducive investment climate and a pre-condition for inclusive economic growth,” the embassy said.
In line with this, Ghana’s Minister Kojo Oppong Nkrumah said that the 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.