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GPGC Moves to Enforce $170 Million Arbitral Award against Ghana

The Ghana Power Generation Company (GPGC) has formally begun enforcement action against the Government of Ghana, after prolonged delays in the resolution of a $170 million arbitral award.

In a letter addressed to Ghana’s Minister of Finance, Hon. Dr. Mohammed Amin Adam, GPGC confirmed that it has filed the necessary legal documents in South Africa to enforce the award, following the government’s failure to respond to earlier correspondence.

The move comes in the wake of Ghana’s stalled settlement discussions with the power company, raising concerns about the country’s international standing and its potential vulnerability to the seizure of state assets abroad.

The letter, signed by Patrick Burke, Director of GPGC, and marked “Private and Confidential,” revealed that GPGC had taken the legal step of initiating enforcement proceedings in South Africa.

Enclosed with the letter were the legal filings, including the “Notice of Motion,” a “Founding Affidavit,” and a “Supplementary Affidavit,” which GPGC delivered as a courtesy, noting that formal service through diplomatic channels could take months.

“We can confirm that we have today filed the relevant papers to commence enforcement of the arbitral award in South Africa,” the letter stated, underscoring GPGC’s frustration with the Ghanaian government’s non-response to their earlier communication, dated September 20, 2024.

U.S. Subpoenas and Threat of Asset Seizures

In a clear sign that the company is ramping up pressure, GPGC also disclosed that it had issued subpoenas to 16 banks based in the United States.

These subpoenas seek to gather information on assets and funds related to Ghana that could potentially be targeted in the enforcement of the award.

“In addition to the 16 banks based in the United States that GPGC has subpoenaed (as evidence in the attached at Annex 2), we plan to issue further subpoenas to US-based corporations with ties to the Government of Ghana later this week, with further action to follow.”
Patrick Burke Director of GPGC

The mention of subpoenas targeting U.S. corporations signals GPGC’s intent to broaden its scope of legal action, with the potential for Ghanaian assets to be frozen or seized.

This could further strain Ghana’s international relationships and damage investor confidence, especially as the country grapples with economic recovery efforts and ongoing debt restructuring.

Dr Mohammed Amin Adam, Minister of Finance, Ghana

A Last-Minute Plea for Amicable Resolution

Despite the legal steps taken, GPGC reiterated its preference for a peaceful resolution to the matter, emphasizing that it would rather avoid further enforcement action.

Patrick Burke’s letter highlighted GPGC’s desire to execute the settlement agreement promptly and in accordance with the agreed payment schedule.

“We would nevertheless like to reiterate the message of our previous correspondence, that we would prefer not to take any further enforcement action and instead to resolve the matter amicably by fully executing the settlement agreement, as soon as possible, ideally within this week, and receiving payment in accordance with the agreed schedule”.
Patrick Burke, Director of GPGC

This plea reflects GPGC’s preference for a cooperative approach, even as it prepares for a drawn-out legal battle.

GPGC won the arbitral award against Ghana after the country’s termination of a power purchase agreement in 2018, which an international tribunal later ruled as wrongful, ordering Ghana to pay $170 million in damages.

Despite several months of negotiations and attempts to settle the matter amicably, GPGC’s patience appears to have run out.

The ongoing standoff over the arbitral award could have severe consequences for Ghana’s international reputation and fiscal stability.

The government’s failure to act promptly could lead to the seizure of assets abroad, which would further weaken its economic position.

Additionally, the subpoenas targeting U.S.-based corporations and banks with ties to Ghana indicate that the country’s financial transactions and assets are now under intense scrutiny, leaving little room for manoeuvre.

The gravity of the situation demands swift action to avoid further damage. Any delays in addressing the issue could exacerbate Ghana’s financial liabilities and complicate ongoing negotiations with international partners such as the International Monetary Fund (IMF).

READ ALSO: Analyst Warns: Political Tensions and December Elections Threaten Short-Term Market Stability

September 24, 2024
Investigate unlawful termination of GPGC contract- NDC

The National Democratic Congress (NDC) is calling for the investigation into circumstances leading to the termination of the GPGC Emergency Power Agreement (EPA).

Speaking during a presser,;the National Communications Officer for the NDC, Sammy Gyamfi, stated that the perpetrators of the act must not go unpunished.

“The NDC is hereby calling for investigation into the termination of the GPGC;EPA particularly the alleged recommendation by the committee for the said EPA.”
Sammy Gyamfi

He also stated that the financial loss the unlawful termination has caused the nation is unpardonable.

“Ghana has been slapped with this judgement debt as a result of wrongful termination by the government,;and their sloppiness in defending same at the arbitration and in court.

“As a party we are very sad that all of us will have to cough up this colossal amount of money $170million which is equivalent to Ghc1.2 billion and which accrues interest daily compounded on a monthly basis.”
Sammy Gyamfi

Ghana Power Generation Company site

Sharing the party’s position on the $170 million judgement debt,;he said the amount could have been channeled into providing infrastructural projects across the various sectors in the country. He added that these projects could have created jobs to improve the wellbeing of Ghanaians.

“This colossal amount could have been channeled into the construction of thousands of dormitories and classroom blocks to end the obnoxious double track system which is undermining the quality of secondary tertiary education in the country.

“We can channel it into the provision of hospital beds and other facilities;to end the much dreaded no bed syndrome claiming so many precious lives.”
Sammy Gyamfi

GPGC EPA approved by Parliament

Sammy Gyamfi further stressed that the GPGC emergency power agreement;the Mahama administration entered into was not only approved by cabinet and the then minister for power, Honorable Kwabena Donkor but was approved by Parliament in line with the law.

“Aside the fact that it was approved by Parliament,;its terms are materially the same as executed by the then power ministry. Some of which like Karpower and Zenpower has been extended. The terms of the GPGC EPA were to a large extent more favorable to the interest of the republic of Ghana than all the other PPAs executed at the time.”
Sammy Gyamfi

He also revealed that the party’s investigations have revealed that;the claim that the PPA committee recommended the termination of the GPGC EPA is palpable falsehood.

“This claims which is contained in an unsigned report making rounds on social media was part of offences of the Akufo-Addo’s government which were out rightly dismissed by the arbitration tribunal in their decision.”
Sammy Gyamfi

Attorney General, Godfred Dame

Attorney General, part of legal representatives

Touching on the Attorney Generals denial to have been involved in the case,;Sammy Gyamfi revealed that the government was represented by a legal team which included the now Attorney General,;Godfred Dame who has claimed not to be part of the legal team that represented the government.

Sammy Gyamfi then disclosed that claims by;the Attorney General that his attention was drawn to the issue after he was made the Attorney General is false. Also

“Our checks show that most of the sittings at the arbitration tribunal, he,;Godfred Dame was the one who led the government of Ghana side.” Also
Sammy Gyamfi

He further said the NDC is appalled by the incompetence and recklessness displayed by;the government with relations to the GPGC contract termination and the circumstances surrounding it.

Read Also: This has been one of the very best VGMAs ever- George Quaye

June 28, 2021
Government didn’t heed to advise on GPGC deal- Benjamin Boakye

Mr. Benjamin Boakye, Executive Director for African Centre for Energy Policy (ACEP), has intimated that government did not take expert advice in resolving the power generation issue in the country which resulted in the Ghana Power Generation Company (GPGC) contract.

Speaking in an interview,;he said government was advised to take its time in fixing the power generation problem by declaring a load shedding schedule to enable them plan to tackle the action but it did not happen.

Mr. Boakye said experts also hinted that the then government was signing too much PPAs which was going to in turn affect the country financially, but was also not heeded to which has unfortunately happened.

His comments come following the current $170m judgement debt government is facing as a result of the termination of the GPGC contract.

Ghana Power Generation Company site

Mr. Boakye said at the time the nation was facing issues of power generation,;different solutions were proposed to bring on power generation for the nation’s power generating system and that resulted to the GPGC contract.

“As experts in the space, we were also careful to appreciate how we were resolving the problem. I remember we were very active in the space at the time trying to raise alarm for government to be cautious on how it resolved the problem.”
Benjamin Boakye

Some energy institutions are to blame

However, he apportioned blame on some energy institutions which were part of the committee to have proposed the solutions to end the power cuts which he claims has rather resulted in a difficult situation.

“Institutions like Energy Commission,;they are suppose to plan our energy system and to show how much we need at that time and proffer solutions. But where were they when we were signing the excess capacity? You can be around and be idle and turn around to be the apostles of prescribing what should be done.”
Benjamin Boakye

Gov’t should allow energy institutions deal with purchases

He further suggested that government should step back and;allow agencies established overtime to deal with such power purchases and agreement. He added that,;if these institutions start to regulate,;the state has to step back and rather bring about policies and leave the business aspect to these institutions.

“That is what we have failed to do and so we have contracts being signed by the Ministries. So, the policy institutions have become procurement institutions and that is the bigger challenge. Ministers are always signing contracts instead of engineering policies.

“Institutes such as the PURC, Energy Commission, GRIDCo amongst others,;that is the reason why we set up these institutions to provide the space for regulation to be efficient and effective. You can’t have these institutions regulating government and that is why it’s not working.”
Benjamin Boakye

In February 2015,;the Ghana Power Generation Company (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.

However, the contract was terminated in 2017 and GPGC pressed legal charges against government over the termination basis.

Read Also: Ghana receives US$12.5 billion in FDI flows from 2016-2020- UNCTAD

June 28, 2021