Former Power Minister during the John Mahama administration, Dr. Kwabena Donkor, has called for a parliamentary inquiry into the termination of the power purchase agreement between the Ghana Power Generating Company (GPGC) and the New Patriotic Party (NPP) administration, led by then-Energy Minister Boakye Agyarko.
The termination of this agreement resulted in a judgment debt of $140 million awarded to Singaporean firm Trafigura, the majority owner of GPGC.
The judgment debt has put several valuable properties at risk of being auctioned to satisfy the award. This includes the Ghana High Commission building in the UK, the commissioner’s residence, the Ghana International Bank building, and others.
The dispute stems from the government’s decision to cancel the contract for the installation and operation of two power plants. The government cited high tariffs, legality concerns, and other issues as reasons for terminating the agreement.
However, Dr. Kwabena Donkor believes these justifications are not valid. He contends that the GPGC deal was the most cost-effective and brief among all the power purchase agreements signed at the time and that the judgment debt could have been avoided.
In light of this, he calls for a parliamentary investigation into the actions of the former Energy Minister and other officials responsible for the termination.
“It was very avoidable as I have always said. Let me quickly say this. This was the cheapest of all the emergency power plants in terms of cost. It was also the shortest because it was for four years. There was no requirement for the government of Ghana to put down a guarantee, and then again the total capacity charge made of capital recovery, fixed ONM, and non-fuel variable ONM came to 4 cents per kilowatt hour. It was the cheapest at the time of all the emergency power plants we brought in, and so it couldn’t have been on the basis of cost.”
Dr. Kwabena Donkor further clarified that the government’s assertion that GPGC failed to obtain siting and construction permits is not a valid argument. He explained that the responsibility for obtaining these permits was shared between the state and the company, as outlined in the contract.
“Every contract, at least power contracts, contain conditions for termination. My worry at the time and I raised the alarm, was that the letter signed by the then Energy Minister Boakye Agyarko, stated that Trafigura or the Ghana Power Generating Company [GPGC] which was the subsidiary we had signed the contract with, had not obtained all the necessary Energy Commission permits.
“In the Power Purchase Agreement, one of the obligations of the government of Ghana was to assist the contractor obtain all relevant government of Ghana permits. And so if we turn around to use that as the basis for termination it creates a problem for all of us.”
Although acknowledging the government’s authority to terminate agreements at its discretion, he noted that the state did not adhere to proper procedures in canceling the contract.
“Let me concede that the government of the day can decide to terminate any contract, but there are consequences for termination. And in all agreements, there are conditions and processes for termination, and so if you do not follow the processes and conditions, particularly if the termination is not justified as ruled by the arbitration panel, then we are in trouble, and this is exactly what has happened,” he insisted.
He added “If we had negotiated the termination, we could have even taken ownership of the equipment. Unfortunately, even after the court had ruled, we went to sleep. Trafigura is still doing business in Ghana, and therefore we had some leverage at least in negotiating a payment plan, but all the way from 2021 we went to sleep.”
The Member of Parliament for Pru East dismissed the government’s justification that the power plants were used or outdated, asserting that this information was openly available. He further contended that the GPGC plant was not the only previously owned plant acquired by the country.
“Yes, it is used equipment and it was known at that time. It was not the only used equipment that was brought in. The AKSA plant was also used, it wasn’t new. And so, for AKSA we signed a 5-year agreement, and the government has found it necessary to extend this agreement for another 10 years, so the question of the equipment being used is neither here nor there.”
The lawmaker is calling for those accountable for the contract termination to respond to crucial inquiries.
“I believe the Ghanaian state should ask the people who took the decision to terminate to tell us why they terminated. I believe that is the route to use if we have to improve our governance. Those who were responsible would have to tell us why they took that decision because commercially, and legally it doesn’t make sense.”
“Even from an energy perspective, you don’t terminate the cheapest emergency plant you have. And then if you say it was an old plant, we knew it. AKSA was also an old plant, we signed for five years as an emergency plant, but this government has gone ahead to extend it for a further ten years. And so if you add all these, we find it extremely difficult to justify. Maybe Hon. Boakye Agyarko who signed the letter may be able to tell us what some of us don’t know.”
“I believe parliament is the best institution to do that because the decision to terminate was taken by the executive arm, and so you cannot ask the executive arm to investigate it. Ghanaians must know why, we have the right to know,” he added.