Dr. Kwabena Donkor, a Former Minister of Power under the John Mahama administration, has urged the Ghanaian parliament to open an investigation into the termination of a power purchase agreement with the Ghana Power Generating Company (GPGC).
This contract termination ultimately resulted in a $140 million judgment debt awarded to Singaporean firm Trafigura.
Trafigura, the majority owner of GPGC, secured this judgement in January 2021 when an arbitral tribunal in London determined that Ghana had unlawfully terminated the contract, which pertained to the installation and operation of two power plants.
“Yes, it is used equipment and it was known at that time. It was not the only used equipment that was brought in. The AKSA plant was also used, it wasn’t new. And so, for AKSA we signed a 5-year agreement, and the government has found it necessary to extend this agreement for another 10 years, so the question of the equipment being used is neither here nor there.”
The government stated that the decision to terminate the contract in 2017 was based on multiple factors, including high tariffs, lack of capacity on GPGC’s part to agree, and other violations of the contract terms.
However, Dr. Kwabena Donkor has expressed his doubts about the government’s justifications for the contract termination. He argued that the GPGC deal was the most cost-effective and had the shortest duration among all the power purchase agreements signed at the time.
“I believe the Ghanaian state should ask the people who took the decision to terminate to tell us why they terminated. I believe that is the route to use if we have to improve our governance. Those who were responsible would have to tell us why they took that decision because commercially, and legally it doesn’t make sense.”
According to him, the $140 million judgment debt was avoidable, and the termination was not justified based on cost.
Dr. Donkor further pointed out that the government’s claim that GPGC failed to obtain necessary permits was flawed, as the contract stipulated that the government was responsible for assisting the contractor in obtaining these permits.
The former Power Minister stressed the need for those responsible for the termination to answer important questions about the decision. He believes that a parliamentary investigation is the best way to gain insight into the termination process and ensure transparency.
Dr. Kwabena Donkor emphasized the importance of understanding why the decision to terminate the contract was made, both from a commercial and legal standpoint, to improve governance and accountability in Ghana. He asserted that the Ghanaian public has the right to know the reasons behind this significant judgment debt.
