Dr. Kwabena Donkor, a former Minister of Power during the John Mahama administration, has urged Parliament to investigate the decision made by the former Energy Minister, Boakye Agyarko, and other officials from the New Patriotic Party (NPP) government. This decision led to the termination of a power purchase agreement with the Ghana Power Generating Company (GPGC), resulting in a $140 million judgment debt.
Several properties, including the Ghana High Commission building in the UK (which offers visa and other services), the commissioner’s residence, and the Ghana International Bank building, are at risk of being auctioned to cover the $140 million judgment debt awarded to the Singaporean company, Trafigura.
Trafigura, the majority shareholder of GPGC, obtained this award in January 2021 through an arbitral tribunal in London, which ruled that Ghana had improperly terminated a contract for the establishment and operation of two power plants.
The government claims that the Ministry of Finance has taken measures to settle the debt, but Ghana’s High Commissioner to the United Kingdom, Papa Owusu Ankomah, believes that the government’s financial limitations are responsible for the failure to make the agreed payments to the judgment creditor.
In 2017, on the Attorney General’s recommendation, the government canceled the agreement because, if executed, the deal’s high tariffs would have cost the state $115,480,000.
The termination of the power purchase agreement (PPA) with Ghana Power Generating Company (GPGC) was justified on the grounds of alleged illegality, including GPGC’s lack of capacity to enter into a PPA, failure to obtain required permits, the use of used equipment against policy, and non-compliance with certain conditions, among other reasons.
However, the former Power Minister has countered these justifications, asserting that the termination of the GPGC deal was unwarranted. During an appearance on PM Express on October 24, he contended that the GPGC agreement was both the most cost-effective and the shortest among all the PPAs signed at that time. He emphasized that the judgment debt now faced by the government could have been avoided.
He explained that the GPGC deal was the most economical among the emergency power plants in terms of cost, with a duration of just four years. Furthermore, there was no requirement for the Ghanaian government to provide a guarantee. He also pointed out that the total capacity charge, comprising capital recovery, fixed operation and maintenance costs, and non-fuel variable operation and maintenance costs, amounted to only 4 cents per kilowatt hour. This made it the most cost-effective option among the emergency power plants procured at that time, and therefore, the termination couldn’t have been justified based on cost considerations.
Dr. Kwabena Donkor further clarified that the government’s assertion that GPGC failed to acquire the required siting and construction permits was not a strong argument, as the responsibility for obtaining these permits was shared between the company and the state according to the contract.
He explained that in most power contracts, there are provisions for contract termination. His concern at the time, which he had raised, was that the letter signed by the then Energy Minister Boakye Agyarko stated that Trafigura or GPGC had not obtained all the necessary permits from the Energy Commission. However, in the Power Purchase Agreement, it was stipulated that one of the obligations of the Ghanaian government was to assist the contractor in obtaining all the relevant permits from the government of Ghana. Therefore, using this as the basis for termination created complications for all parties involved.
While he acknowledged that the government had the right to terminate agreements as it saw fit, Dr. Kwabena Donkor argued that the state failed to follow the proper due process when terminating the contract.
We could have even seized possession of the equipment if we had agreed to the termination through negotiation. Sadly, we went to bed even after the judge issued her decision. Since Trafigura is still operating in Ghana, we at least had some negotiating power when it came to a payment schedule, but starting in 2021, we stopped trying.
The Pru East MP insisted that there was no information being kept secret and refuted the government’s claim that the plants were outdated or used. He added that there were other utilized plants that the nation had acquired in addition to the GPGC plant.
“Yes, the equipment is used, and that was known at the time. It wasn’t the only piece of secondhand equipment brought in. It wasn’t a new factory; it was the AKSA plant. Therefore, the topic of the equipment being utilized is irrelevant because we entered into a 5-year contract with AKSA, which the government then decided to extend for a further 10 years.
Source: Marzuuq | Ghana360news.com
