$100M Turkey Barges Deal In Limbo

Reports reaching DAILY GUIDE indicate that the ongoing public-private partnership agreement (PPA) between the Electricity Company of Ghana (ECG) and Karpowership of Turkey over the emergency power barges is hitting a snag.

This is because the two local banks with their headquarters in Togo and Nigeria respectively – earmarked to finance the deal – appear to have developed cold feet.

Sources said much effort is being made from the presidency to convince the banks but even that, things are still proving to be difficult.

President Mahama, through an executive fiat, has directed the Ghana National Petroleum Corporation (GNPC), through a letter from the Attorney General’s Department, to provide cover for the facility.

To make matters worse, the National Democratic Congress (NDC) government appears to be bypassing Parliament to push the deal through by using the GNPC to issue the $100 million bank guarantee since the ECG is not liquid enough to take up the deal.

Sources say the government is relying heavily on the recent court order that is allowing the GNPC to source $700 million loan without parliamentary approval as the main guarantee to push through the barges’ deal.

Some people at GNPC, according to a source, are unhappy about the way loan facilities are being abused.

Feet Dragging
The source said the Pan-African Bank, with its headquarters in Lome, Togo, is unwilling to provide the guarantee, but presidential powers were reportedly brought to bear on the bank’s Accra office to advise Togo; and it was purportedly based purely on the opinion of the Attorney General

As a result, the bank was compelled to succumb to the demand last week and had since issued $50 million guarantee on behalf of GNPC.

‘Ghanaian staff of the bank are very unhappy about the pressure mounted on them to get them to agree to the deal and are complaining bitterly,’ the source said.

Killing Similar Deal
The Nigerian bank, on the other hand, is adamant to enter into the deal but the presidency is said to be ‘hitting hard against the group in Nigeria to get them to approve it.’

The bank has become reluctant because in the past when it got the Kufuor administration to finance a similar project in Tema under a PPA worth $20 million based on the offtaker agreement, the NDC government, after only two year in office, killed the deal, culminating in the protracted dumsor (power outages).

AG’s Reluctance
The wording of some aspects of the agreement even showed clearly the Attorney General Department’s reluctance.

‘The AG’s opinion of February 4, 2015 shows clearly that it was the Office of the President which directed the GNPC to step in because ECG has not the capacity to issue the guarantee,’ the source said.

“GNPC has been directed by the Office of the President to facilitate a timely deployment of the power ship by providing the two bank guarantees as security on behalf of ECG,’ the source quoted most material parts of the AG’s opinion of the agreement.

‘Beyond that, the AG’s opinion also says that GNPC does not have to take the deal to Parliament. We all know the finance minister has issued a Comfort Letter to the banks which is to say that government will make sure GNPC redeems the guarantee if need be,’ the source added.

Danger Ahead!
According to the source, ‘The danger with this deal is that it is for 10 years. It is an emergency solution for the power crisis which saddles the state with a 10-year deal, with suspicion of official connivance and interest.’

It noted, ‘The chances of future government challenging the legality of this deal are too great. The question is, why is government so reluctant to do the right thing? Why won’t it bring this matter to Parliament?’

The Agreement
Under the agreement, the Turks are expected to run the barges and sell power to the ECG for onward transmission to customers, which is equivalent to what the Volta River Authority (VRA) is doing for ECG.

‘They (Turks) want a clear-cut guarantee to ensure that their investment does not go down the drain,’ according to our source.

By William Yaw Owusu

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