The National Democratic Congress (NDC) says the Akufo-Addo-led government knew it was wrong to terminate the Emergency Power Agreement (EPA) signed between the erstwhile John Mahama-led government and the Ghana Power Generation Company (GPGC).

Speaking at a Press Conference, NDC’s Communications Officer, Sammy Gyamfi stated that the government after cancelling the agreement in 2018 did not only concede that its actions were wrong but also gave GPGC 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 the same by reinstating the EPA, he said.

The state is paying a $170 million judgment debt as a result of cancellation of the agreement. This follows a ruling by a London-based United Nations Commission on International Trade Law tribunal.

The court issued its final award, ordering the government of Ghana to pay a contractually defined “early termination payment” of more than US$134.3 million plus interest and costs.

The agreement between the government and GPGC, an independent power producer, was terminated in 2018.

According to Godfred Dame, a report presented by a committee constituted in September 2016 advised on the abrogation of the contract.

“The committee set up by the NDC in 2016 – against the background of a recognition that there were so many PPAs entered into by the NDC administration, and, therefore, those agreements were going to result in excess capacity, as it was termed – came to a conclusion that this agreement had to be terminated. The committee singled out this particular agreement for termination.”

However, Sammy Gyamfi at the conference stated that the reasons that were cited by the government as the basis for the termination of the GPGC EPA did not include any issue of excess power or excess capacity charges.

The reasons, he said, included failure of GPGC to secure a license from the Energy Commission to enable them to engage in the sale of electricity in the country, failure of GPGC to secure a siting and construction permit for the project and 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 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,” he added.

Sammy Gyamfi said that based on their facts, the huge judgement debt of USD$170 million has been occasioned by the “criminal negligence, incompetence and recklessness” of the Akufo-Addo government. 

He said that the government’s “willful recklessness” in terminating the GPGC EPA on the basis of “contrived and frivolous” basis is the reason why Ghana has been slapped with the $170 million judgment debt.

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 to the relocation of GPGC equipment from Italy to Ghana, to alleviate the effects of 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 Office of the President issued a final draft report. The committee set forth for consideration the option of termination of the agreement at an estimated cost of US$ 18 million rather than the payment of an excess capacity charge of US$ 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 USD 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 US$ 115,480,000, if implemented, with its attendant high tariff. On the basis of 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.

Read more on the PPA: Controversial Judgment Debt: Power Purchasing Agreement between Ghana and GPGC explained