Quantum Oil sue IFC, OPEC Fund for breach of contract
A local oil company, Quantum Oil Terminals Limited, has dragged the International Finance Corporation (IFC) and the OPEC Fund for International Development to the Accra High Court for an alleged breach of contract and discrimination.
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In a suit filed at the Commercial Division of the Accra High Court, the company is demanding $41,319,123 in total damages from the two international bodies for allegedly failing to provide it with a $16-million loan facility which was agreed among the three entities.
The said loan was to be used by Quantum to construct a petroleum storage facility in Tema in 2012 to help it meet a National Petroleum Authority (NPA) regulation that required bulk oil distribution companies to construct their own storage facilities.
Before then, Quantum was storing its products in facilities at the Bulk Oil Storage and Transportation (BOST) Company Limited, which served notice to Quantum that it could not continue to store its products there from 2014, in line with the NPA directive.
Approach
Quantum, in its statement of claim, said the IFC, which is a member of the World Bank Group, approached the company in June 2012 and declared its intention to finance the construction of the storage facility.
The IFC, it claimed, promised to provide funding at a rate of seven per cent, which was below the 12 per cent that other financial institutions were offering.
It stated that the IFC later brought in the OPEC Fund to also “negotiate under the same terms and conditions in a bid to syndicate the total facility required by Quantum’’.
“The most significant and fundamental promise made by the IFC and the OPEC Fund to Quantum Oil Terminals Limited to attract the latter’s agreement to commence negotiations with the former was that it took no more than six months to commence and complete defendants’ procedures and processes to access their financing,’’ the statement of claim added.
As a result of the promise made by the two international bodies, Quantum averred, it truncated the previous discussions and initial agreements it had initiated with other international and local financiers so as to pursue this simpler alternative promised by the two bodies.
Alleged broken promise
Of the $16 million that was agreed upon, the IFC was to disburse 50 per cent, with the rest being provided by the OPEC Fund.
According to the oil company, the signing of the contract finalising the financing agreement was done with massive media coverage by the international and local press.
“That was to augment the credentials of the IFC and the OPEC Fund as major promoters of growth in the private sector in developing countries,’’ it said.
Despite the signing of the agreement and its massive publicity, Quantum averred, the two international bodies, instead of providing it with the loan within six months, as promised, demanded on countless occasions Quantum’s business documents and information.
The demands, it said, were made in spite of the fact that Quantum had already provided the said documents before the agreement was signed.
“The plaintiff (Quantum) spent the whole of 2013, 2014 and 2015 repeating the provision of same documents and information it had provided for the defendants previously before the agreement was signed.
“Due to this undue delay, the plaintiff missed the deadline for the completion of the construction of the tank farm and was sanctioned to pay penalties. At the time, the deadline given by BOST to cease accepting products from third parties for storage lapsed and that situation resulted in substantial reduction in the volume of products plaintiff could import into the country and that in turn caused a reduction in the volume of its business,’’ the statement of claim added.
Quantum further claimed that after paying numerous commitment fees and making available all documents and information about its operations, the IFC and the OPEC Fund refused to provide the loan but rather abrogated the agreement on November 9, 2016.
As a result of the refusal of the two entities to provide it with the loan facility, Quantum said, it had to resort “to making alternative financing arrangements at a much expensive cost of 12 per cent per annum”.
The company further claimed that during the same period the two international bodies financed and “invested heavily in multinational companies owned by non-indigenes in the country”.
“This is a clear case of bias in favour of investing in companies with foreign ownership, much against those wholly owned by indigenous Ghanaians, thereby violating their own core mandate to support local and indigenous companies and industries, alleviate poverty and promote projects in developing countries,’’ it said.
Reliefs
Quantum Limited is, therefore, asking the High Court to order the IFC and the OPEC Fund to disburse the loan, taking into consideration inflation rates within the period
It also wants general damages totalling $41,319,123 to compensate it for the escalation in the cost of the project, fees and charges that it paid directly to the two bodies, various consultancy fees, lost business revenue, among other demands.
it also wants punitive damages to compensate it for alleged discrimination by the two international bodies and damage to its business reputation.