The former Power Minister Dr. Kwabena Donkor, has expressed deep frustration over the handling of Ghana’s contractual obligations, specifically regarding the Trafigura judgment debt, which culminated in a significant financial penalty.
Dr. Kwabena Donkor’s reflections reveal a strong disapproval of the government’s management of the case, highlighting several key issues that led to this outcome. Dr. Donkor’s insights provide a comprehensive critique of what he described as a failure of governance rooted in parochial interests, inadequate legal strategy, and poor contract management.
“I believe we have not handled this judgment debt well. We have not highlighted them enough. These are avoidable debts.”
Dr. Kwabena Donkor the former Power Minister
Dr. Kwabena Donkor particularly underscored the flawed termination of the contract, warning that the government did not follow the proper procedure for abrogation he lamented; Signaling that the government’s missteps led to unnecessary financial losses.
“When the government decided to abrogate the contract, I warned, that every contract has a process of abrogation. You make room in the contract for termination. But if you do not follow the termination procedure, then of course, you [would] run into a problem.”
Dr. Kwabena Donkor the former Power Minister
Flimsy Grounds for Termination
One of the central points of Dr. Donkor’s critique is the rationale behind the termination of the contract. He pointed out that the primary reason cited by the then-minister for terminating the contract was Trafigura’s failure to secure the necessary licenses from the Energy Commission.
However, Dr. Donkor emphasized the government’s obligation under the power purchase agreement.
“In the power purchase agreement, one of the obligations of the government of Ghana was to assist the company to secure all government permits… So, if you use this as a basis for termination, you are just laying the groundwork for losing at any arbitration.”
Dr. Kwabena Donkor the former Power Minister
Dr. Donkor also highlighted that the terminated agreement had the lowest tariff among all thermal power contracts the government had signed. Moreover, unlike other agreements, it did not require any government guarantee, and deciding to terminate the contract is more questionable.
“You would not ordinarily terminate the contract that gives you the cheapest tariff. That will not be what you will terminate. Particularly when the grounds for termination are so flimsy.”
Dr. Kwabena Donkor the former Power Minister
Parochial Interests and Legal Failures
Dr. Donkor raised concerns about the influence of parochial interests in the decision to terminate the contract. He questioned the legal advice that the government received, suggesting that it may have been driven by individuals with vested interests rather than the national interest.
“I have reason to believe that this decision was taken based on parochial interest. Who was representing Trafigura in Ghana at the time? That is why I made the categorical statement that we’ve been ill-served by parochial interest.”
Dr. Kwabena Donkor the former Power Minister
The failure of Ghana’s legal team to adequately challenge the $134 million judgment awarded to Trafigura is another critical point of concern for Dr. Donkor. He questioned whether the Attorney General’s Department and the Ministry of Energy were diligent in defending the country’s interests.
Another point Dr. Donkor addressed is the government’s argument that Trafigura’s equipment was used, which supposedly justified the termination. He dismissed this reasoning by pointing out that other power plants, were also slightly used, yet their contracts were not terminated.
“The Trafigura plant, which was an emergency plant, was not the only slightly used plant we brought to Ghana. The Absa plant was also slightly used and that contract was signed for five years … this government has further extended the contract by ten years.”
Dr. Kwabena Donkor the former Power Minister
Recommendations for the Future
Dr. Donkor called for accountability in handling such contracts in the future. He suggested that the next government, which he believes will be led by the National Democratic Congress (NDC) after the 2024 elections, should review all such judgments and hold public officials responsible for any mismanagement.
“We must probe all such judgments debt and find the established culpability. Public officials who let this country down should be asked to pay for it.”
Dr. Kwabena Donkor the former Power Minister
Dr. Donkor’s recommendations indicate a need for reform in Ghana’s approach to contract management and legal defenses in international disputes. His critique serves as a call to action for better governance, where national interests should override individual gains, and where due diligence is rigorously followed to prevent avoidable losses to the state.
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