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GPGC judgment debt: I’ve nothing to hide – Kwabena Donkor to Godfred Dame

Former Power Minister, Dr Kwabena Donkor, has called the bluff of Attorney General Godfred Dame, to investigate him for his role in a Power Purchase Agreement with energy company GPGC.

The state is paying a $170 million judgment debt as a result of cancellation of the agreement.

The judge in the London arbitration also ruled that the basis of the decision to terminate the agreement did not reflect the facts.

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


But speaking on JoyNews’ Upfront, Dr Donkor said he is ready to face the investigative bodies over the contract he entered into with GPGC.

“I am a law-abiding Ghanaian. If the CID says they want to investigate something, what do I have to hide?” he quizzed.

He further stated that “I will go to the CID. This is not the first time I have been called to the CID.”

Dr Donkor also questioned the basis under which the agreement was cancelled by government.


“First of all, when I saw a couple of the termination letter, the basis of termination, the operating phrase was that they had not obtained an energy commission license. In the agreement, government was obliged to assist them to obtain all licenses and permits so if we have that obligation on our path, we don’t turn round and use that as an excuse a reason to terminate.”

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 Dr Kwabena Donkor believes the Attorney General is hunting for a scapegoat for what sees as wrongful termination of the contract.

“Other than that, we don’t expect the Attorney General to sit on radio threatening and intimidating. You don’t expect that,” he told Winston Amoah.

He wants the government to reassess the issue and address concerns raised by the court in London.

The former Minister added that since the recent development ensued, “nobody even asked me for a second that what was the basis for this agreement, why this you sign this or what informed this agreement. Nobody.”

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.

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

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