20-Year review of judgement debt payments in Ghana — Impact, causes, remedies (VI)
In November 2017, the Minister of Energy reported to Parliament with the following recommendations, which he argued was based on the PPA Committee report.
a. Four PPAs with a combined capacity of 1,810 megawatts be deferred until 2018-2025;
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b. Three PPAs with a combined capacity of 1,150 megawatts be deferred beyond 2025;
c. Eleven PPAs, including GPGC Ltd, with a combined capacity of 2,808 megawatts, be terminated.
The Minister, in his submission to Parliament noted that, “the Government stands to make significant savings from the deferment and (or) termination of the reviewed PPAs.
The estimated cost for the terminations is US$402.39 million, compared to an average annual capacity cost of US$586 million each year or a cumulative cost of US$7.619 billion from 2018 to 2030. (Arbitral Tribunal Ruling, PCA Case No. 2019-05, p. 43).
Regarding GPGC Ltd, the Attorney-General, it was reported, had argued that its project would result in a US$115.48 million cost to the GoG if it were implemented, given its attendant high tariff.
Further, the Attorney-General alleged illegality related to GPGC Ltd’s construction activities in view of its failure to obtain a license to embark on the project and a breach of Energy Commission policy by GPGC Ltd given that the power plants were not new.
Subsequently, the Attorney-General advised the GoG to terminate the contract on the following grounds:
a. Illegality for want of capacity of GPGC Ltd to enter into a PPA;
b. Failure to obtain Siting and Construction permits;
c. Installation of used plant contrary to policy;
d. Failure on the part of GPGC to fulfill its conditions precedent as well as conditions subsequent.
The Attorney-General further added, “if GoG were to terminate the EPA on the last of the four grounds, it (GoG) would be entitled to the Early Termination Fee.”
The notice of termination, which was first issued to GPGC Ltd in February 2018, took effect in August 2018, after inconclusive exchanges between the GoG and GPGC Ltd had occurred over the period following the initial notice.