The opposition National Democratic Congress (NDC) is of the view that Ghana has been slapped with a $170 million judgment debt after the cancellation of a power purchase agreement with Ghana Power Generation Company (GPGC) due to the criminal negligence, incompetence and recklessness of the Akufo-Addo government.
According to the party, the willful recklessness in terminating the GPGC-Emergency Power Agreements (EPA) on the basis of contrived and frivolous basis is the reason why “Ghana has been slapped with this avoidable judgment debt.”
The state is to pay a $170 million judgment debt as a result of cancellation of the agreement. The agreement between the government and GPGC, an independent power producer, was terminated in 2018.
Speaking at a press conference at the party’s head office in Accra Monday afternoon, June 28, 2021, the party’s National Communications Officer, Sammy Gyamfi said a future NDC government will bring to book all individuals whose actions have caused the country to pay a $170 million judgement debt.
“The perpetrators of this evil must not go unpunished,” he noted.
Background
In February 2015, the GPGC entered into negotiations with the Government of Ghana for the provision of a fast-track power generation solution.
This was to see the relocation of the GPGC Equipment from Italy to Ghana, to alleviate Ghana’s then-ongoing power shortage crisis. In June 2015, Government and GPGC signed the power agreement.
In April 2017, a committee set up by the Ministry of Energy at the direction of the President’s Office issued a final draft report. The committee set forth for consideration the option of termination of the agreement at an estimated cost of $18 million rather than the payment of an excess capacity charge of $24.9 million per annum over the contract period of 4 years.
In its Summary of Proposed Modification to PPAs of Committed Projects, the Committee noted that the GPGC Project was an:
“Emergency Plant with a 5-year PPA used plant (not new) and high tariff. Major equipment has arrived at the Tema port awaiting tax exemption to clear.”
The report noted that based on the 2018-2020 demand-supply capacity balance and the tariff rank of this project, the full capacity of this project will be excess and result in an estimated total cost of $115.48 Million within the duration of the PPA. It, therefore, recommended that the actual development cost of the project to date should be verified and used as a guide in negotiations for termination.
In August 2017, Attorney General Gloria Akuffo issued an opinion on the agreement in response to a cabinet directive. She noted
“… It has become necessary to review the implementation of the PPAs; because should all of them be implemented as originally scheduled, it would result in the production of excess energy with its attendant cost, which would worsen the financial situation of the power sector. A review would therefore help to cut back on losses that would be incurred.”
The Attorney-General noted, too, that the GPGC Project would result in costs of $115,480,000, if implemented, with its attendant high tariff. Based on her understanding of the position, the Attorney-General considered that GPGC’s failure to obtain a licence from the Energy Commission left it with no capacity to enter into a PPA.
Below is the NDC’s statement
STATEMENT DELIVERED BY THE NATIONAL COMMUNICATION OFFICER OF THE NATIONAL DEMOCRATIC CONGRESS, COMRADE SAMMY GYAMFI ESQ., AT A PRESS CONFERENCE HELD AT THE PARTY’S HEADQUARTERS ON THE ISSUE OF THE USD$170 MILLION JUDGEMENT DEBT AWARDED AGAINST GHANA TO GPGC BY THE PERMANENT COURT OF ARBITRATION OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW TRIBUNAL.
Monday, 28th June, 2021
Theme: UNPACKING THE $170 MILLION GPGC JUDGEMENT DEBT: EXPOSING THE LIES, NEGLIGENCE AND CRASS INCOMPETENCE OF THE AKUFO-ADDO GOVERNMENT.
Good afternoon distinguished ladies and gentlemen of the media. On behalf of the National Democratic Congress, I will like to thank you for honoring our invitation at such short notice.
The purpose of this press conference is to share with you our position on the raging issue of the judgement debt of USD$170 million dollars that has been awarded against the Republic of Ghana to a company called, Ghana Power Generation Company (GPGC) by the Permanent Court of Arbitration of the United Nations Commission on International Trade Law Tribunal, an issue that has set many tongues wagging in the past couple of days. We are pretty sure that by the time we are done unpacking the facts of this case in this evidence-based presentation, you will be left in no doubt about how we got ourselves into this avoidable financial loss situation and the personalities who are responsible for same.
BRIEF BACKGROUND
Friends from the media, let me start by providing a brief background to this issue in order to situate the discussion in a proper context.
As we all know, Ghana was confronted with a serious power crisis also known as “Dumsor” between the year 2013 and 2015 which negatively affected citizens, businesses and the economy as a whole. This problem which was not a new phenomenon was largely occasioned by a power generation capacity shortfall. The visionary Nation Builder, H.E John Dramani Mahama who was the President of the country at the time, did not seek to apportion blame but instead took full responsibility for the age-long problem and set out to address the country’s generation capacity deficit through the fastest mobilization of emergency power ever witnessed in the history of this country. The goal was not only to produce power to meet our immediate power demand as a country but to produce more power to meet our ever-increasing future power needs and more importantly, to potentially increase the amount of power we export to neighboring and other Sahalian countries for revenue.
One of such Emergency Power Agreements (EPA) that the erstwhile NDC/Mahama administration executed in furtherance of this vision was the EPA with the Ghana Power Generation Company (GPGC) for the supply of 107MW of power. The Agreement which was signed on 3rd June, 2015 was negotiated by a competent team of technical experts from the then Ministry of Power, the Electricity Company of Ghana, the Volta River Authority and the Office of the Attorney General and Minister of Justice. After this crack team of experts had negotiated the EPA and approved its contents, the EPA was approved by Cabinet and later, the Parliament of the Republic Ghana on 23rd July, 2015 with the NPP-side fully participating in the approval process, both at the Mines and Energy committee level and at the plenary.
Ladies and gentlemen, it is worthy of note that among the EPAs executed by the Government of Ghana, the GPGC EPA was the one with the most favorable terms for us as a country. Firstly, it had a capacity charge of of 4 US Cents per KW/H with GoG’s payments denominated in Ghana cedis and secondly, it had the shortest duration of four (4) years. Thirdly, and more importantly, it was the only EPA under which the Government of Ghana was not required to provide any financial guarantee or standby Letters of Credit.
WRONGFUL TERMINATION OF GPGC EPA
Ladies and gentlemen of the media, the implementation of the GPGC EPA proceeded smoothly under the Mahama/NDC administration until the Akufo-Addo/Bawumia government took over the reins of power in the year 2017. On 13th February, 2018, the Minister for Energy, Boakye Agyarko wrote to terminate the GPGC EPA. The termination of the GPGC EPA, according to Boakye Agyarko, was on the instructions of Cabinet, which is chaired by President Nana Addo Danquah Akufo-Addo.
It is instructive to note that the reasons which were cited by the Akufo-Addo government as the basis for the termination of the GPGC EPA did not include any issue of excess power or excess capacity charges as government would have us believe. Rather, the reasons which were contained in Boakye Agyarko’s termination letter of 13th February, 2018 and the Advice of the then Attorney General, Gloria Akufo dated 28th August, 2017, bordered on alleged non-performance of certain Conditions Precedent and Subsequent by GPGC, namely;
1. Failure of GPGC to secure a license from the Energy Commission to enable them engage in the sale of electricity in the country, in accordance with section 11 of the Energy Commission Act.
2. Failure of GPGC to secure a siting and construction permit for the project.
3. Failure of GPGC to achieve financial closure.
Distinguished friends from the media, all these claims by the Akufo-Addo government which formed the basis for the termination of the GPGC EPA were found to be contrived and baseless by the Permanent Court of Arbitration of the United Nations Commission on International Trade Law. At paragraph 479 of the Arbitral Award, all the three (3) Arbitrators, including Ghana’s selected Arbitrator, Professor Fiadjoe, unanimously held that these claims by the Akufo-Addo/Bawumia Government did not “reflect the true facts”.
The Tribunal among other things, noted that GPGC had actually secured a building permit from the Kpone Katamanso District Assembly for the Blue Ocean project and had actually applied for a commercial license from the Energy Commission, save that, President Akufo-Addo had not constituted the Board of the Energy Commission, which is the body mandated by law to issue such Licenses at the time the Agreement was being terminated.
Additionally, the Tribunal found that all the Conditions Precedent and Subsequent that were yet to be fulfilled were wholly attributable to failings on the part of the Government of Ghana and not GPGC. In short, the Arbitration Tribunal found that the termination of the GPGC EPA by the Akufo-Addo/Bawumia government was wrongful and without any lawful justification, for which reason the panel unanimously awarded damages of about USD$170 million against Ghana, inclusive of interest. This can be found at paragraph 493 of the Arbitral award.
Ladies and gentlemen of the media, it is crystal clear from the foregoing facts that are contained in the Arbitral Award, that this huge judgement debt of USD$170 million has been occasioned by the criminal negligence, incompetence and recklessness of the Akufo-Addo government. Their willful recklessness in terminating the GPGC EPA on the basis of contrived and frivolous basis is the reason why Ghana has been slapped with this avoidable judgment debt.
GoG’s CONCESSION THAT THE TERMINATION OF THE GPGC EPA WAS WRONG.
Friends, it will surprise you to know that after the GPGC EPA was terminated and the company appealed to government to rescind its decision, the Akufo-Addo government acting through the Minister of Energy and his Deputy conceded that the termination was wrong and gave the company several assurances that the President and Cabinet were going to take remedial steps to reinstate the terminated EPA. Evidence of this fact is contained at paragraph 486 of the Arbitral award, and settles the fact that indeed President Akufo-Addo, the Minister of Energy at the time, Boakye Agyarko and the Attorney General are jointly and severally responsible for this USD$170 million financial loss to the State. They knew and acknowledged that they had no basis to terminate the Agreement, yet they proceeded to terminate it and failed to remedy same by reinstating the EPA.
What is even sad in all this, is the fact that Ghana is now going to pay a whopping USD$170 million as judgement debt to a private company for a deal that would have caused the nation USD$99.6 million over the full four (4)-year duration of the Agreement. That is, if the Agreement had been maintained and not terminated by the Akufo-Addo government.
FRAUDULENT CLAIMS ABOUT THE AHENKORA PPA COMMITTEE REPORT
Ladies and gentlemen of the media, the NDC has taken notice of certain false claims by the Attorney General and Minister for Justice, Godfred Yeboah Dame, and spokespersons of the Akufo-Addo government that the decision to terminate the GPGC EPA was based on a recommendation by the Ahenkora-PPA Committee that reviewed a number of PPAs executed by the previous NDC government.
Our painstaking investigation into this matter shows that, the claim that the PPA committee recommended the termination of the GPGC EPA is palpable falsehood. In fact, this claim which is contained in an unsigned report making rounds on social media was part of the defenses of the Akufo-Addo government which were outrightly dismissed by the International Arbitration Tribunal in their decision.
Friends from the media, it will interest you to know that during cross examination at the arbitration proceedings, Dr. Ahenkora, who was the chairman of the PPA committee and a key witness for the Government of Ghana, said that he could not recollect any such recommendation by the committee and dissociated himself from the AG’s advice that recommended the termination of the GPGC EPA. This fact can be found at paragraph 490 of the Arbitral award. This is how much the Akufo-Addo/Bawumia government derilicted in its duty to protect the public purse.
Friends, does it not strike you as strange that Dr. Ahenkora did not bother or see the need to ask the Arbitration Tribunal for leave to refresh his memory by referring to the committee’s report which was the main essence of his testimony?
FALSE ASSURAN