Minister of Justice and Attorney General, Godfred Yeboah Dame

The Attorney General, Godfred Yeboah Dame has disclosed his intention to lodge a formal complaint with the Criminal Investigations Department (CID) to investigate the Power Purchasing Agreement signed between the erstwhile NDC government and Ghana Power Generation Company (GPGC).

According to him, a report by a committee constituted in September 2016 revealed that the agreement was not properly made resulting in excessive power supply.

Speaking on Top Story, Mr Dame blamed the signatories to the agreement for the $170 million judgement debt that the government of Ghana has been instructed to pay to GPGC, by a Commercial Court in London, for unlawful termination of contract.

He said, “the fact as borne out by the PPA committee’s report was that the agreement, together with other agreements, had resulted in such excessive power supply to the state. The state was going to lose $586m per annum and a cumulative cost of about $7.6billion dollars between 2013 and 2018.”

“So I think that when it comes to financial loss, it is so clear in my mind that the responsibility lies clearly with those who entered into the agreement. The basic point is that the entry into this transaction was unnecessary. The entry into this transaction was what resulted in financial loss to the state.”

He stated that he is putting some documents together to request for a formal enquiry into the conduct of the public officers who handled the agreement.

“I, on account of all of this, am going to write a formal complaint requesting an enquiry by the CID into the conduct of the public officers who acted in the manner which resulted in the signing of an agreement which resulted in financial loss to the state.”

“I think that first and foremost the entry into the agreement itself was wrong. There was no justification, because their own committee determined that the agreement was going to result in excessive power.”

His comment comes after a London-based United Nations Commission on International Trade Law tribunal 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 excessive capacity development, as it was termed – came to a conclusion that this agreement had to be terminated. The committee singled out this particular agreement for termination.”

But, Ranking Member on Parliament’s Energy Committee, John Jinapor, believes the former Minister of Energy who served during President Akufo-Addo’s first term should be blamed for causing the $170million to loss the state.

“The government didn’t take the matter seriously. First of all, I hold the view that it was wrong to have terminated the agreement the way and manner in which this government went about it.”

“Clearly we could have saved more than US$150 million if this government had listened to good counsel. But the Minister decided that he would cancel it unilaterally and today, the state of Ghana is asked to pay about US$170 million. That is a whopping amount and it is a colossal amount.” he said.

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 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