IMANI Africa’s Honorary Vice President, Bright Simons, has revealed that the government now faces an additional $112 million payment to a subsidiary of Swiss energy trading giant, Trafigura, due to mounting interest on an unresolved judgment debt.
In an article titled “What Ghana’s Latest Judgment Debt Says About Accountability“, Mr Simons expressed concern over the country’s decision-making process in handling the debt, which he believes lacks proper analysis and foresight.
“Despite paying nearly $100 million of the original judgment debt, which was less than $140 million, the outstanding balance remains over $112 million today and continues to rise daily,” Mr Simons wrote.
He criticized the government’s approach, noting that the decision to stretch out the payment schedule is exacerbated by the high interest rate.
“The interest at that time was about 6.2%. Today, it would have been more than 11%,” Mr Simons revealed.
The judgment debt stems from a dispute between the Ghanaian government and the Ghana Power Generation Company (GPGC), a subsidiary of Trafigura, over a power purchase agreement that Ghana unilaterally terminated in 2018.
In 2015, the government entered an agreement with an Italian-owned company, Ghana Power Generation Company (GPGC), with the goal of producing 107 megawatts of electricity between two plants.
GPGC proceeded to court and in January 2021, an arbitration panel in London ruled in favour of GPGC, ordering Ghana to pay $134,348,661 in damages. Despite partial payments, Ghana still owes over $111 million, with interest continuing to accumulate.
Mr Simons pointed out that Ghana’s failure to meet critical deadlines to appeal the UK tribunal’s ruling has worsened the situation.
The District of Columbia Court in the U.S. recently ordered Ghana to pay the outstanding amount plus post-judgment interest after GPGC sought enforcement of the judgment.
IMANI’s Vice President also emphasized that the events leading to the termination of the contract and the government’s subsequent handling of the arbitration raise serious concerns about governance and accountability in Ghana.
“The chain of events… raises critical concerns about the quality of governance and accountability in Ghana,” he stated in his article.
Ghana’s Attorney General and Minister of Justice, Godfred Yeboah Dame, has clarified the situation, stating that no new judgment has been made against Ghana by a U.S. court.
During an interview on Citi FM on August 21, 2024, Mr. Dame explained that the $134 million award was given in 2021, and the government has been working to meet its payment obligations since then.
“It is the failure to exhaust payment which has led the company to seek enforcement orders in other jurisdictions,” Dame clarified, adding that there has been no fresh judgment against Ghana.
“It is only an enforcement order… due to a failure to pay a judgment debt that accrued way back in January 2021,” he said.