Ghana: GNPC Received US$98.29m In First Half Of 2019
Ghana’s national oil company, GNPC, received an amount of US$98.29 million from the petroleum revenue during the first half of 2019, the country’s central bank has announced.
Similarly, the Annual Budget Funding Amount (ABFA) received US$165.66 million whiles the Ghana Stabilisation Fund (GSF) and the Ghana Heritage Fund (GHF) received an allocation of US$69.85 million and US$29.94 million respectively during the period under review.
A report published on the central bank’s website said: “In H1 2019, a total amount of US$434.48 million comprising lifting proceeds of the Ghana Group, surface rentals, PHF income and corporation income tax was received into the PHF.
“Total petroleum revenue distributed was US$363.74 million. GNPC received US$98.29 million, ABFA received US$165.66 million whiles GSF and GHF received an allocation of US$69.85 million and US$29.94 million respectively during the period under review.
GHF and GSF total return year to date (YTD) was 4.71% and 1.33% respectively.
“Realised income on the GPFs in H1 was US$11.20 million (GHF contributed US$6.72 million and GSF contributed US$4.48 million) as compared to H2 2018 total net realised income of US$9.26 million (GHF contributed US$5.31 million and GSF contributed US$3.95 million). GSF and GHF accumulated reserves were US$455.53 million and US$521.83 million respectively.
“Global economic growth is projected to decline from 3.6% in 2018 to 3.3% in 2019 before picking up slightly to 3.6% in 2020. Growth has moderated amid weak growth in the Eurozone, continued trade policy uncertainty, concerns about China’s greater-than-envisaged growth slowdown outlook at the weakest pace in at least 27 years, higher tariffs on Chinese imports, threats of tariff imposition on Mexican imports, and lingering “no-deal” withdrawal of the United Kingdom from the European Union.
“The balance of risks thus remains skewed to the downside, the major central banks have adopted a dovish stance to monitor implications of incoming data and global economic developments. This dovish stance is favourable for global financial conditions with positive implications for emerging markets and frontier economies in the near-term as investors seek higher yields.
“The crystallization of these risks has in the near to medium term created a flight to quality with safe haven bond yields falling and is impacting positively on the marked-to-market valuations of the portfolios of the Ghana Petroleum Funds.”
Source: laudbusiness.com/energynewsafrica.com
Nigeria: VON Lauds NNPC On Reputation Turnaround
The Voice of Nigeria, the mass communication apparatus dedicated to dissemination of information from the country to the outside world, has applauded the improved global reputation of the Nigerian National Petroleum Corporation (NNPC) which was accentuated with the appointment of Mallam Mele Kyari as the Group Managing Director.
Leading a top level management delegation to the NNPC Towers on Thursday, Osita Okechuku, Director General of the agency, noted that the elevation of Mallam Kyari to the position of GMD of NNPC has helped to place a seal of credibility on the operations and activities of the Corporation.
The VON DG explained that based on its varied interaction with global radio audiences, the agency was in a position to feel the pulse and changing perception about the Corporation within the last four years, noting that VON was ready to partner with the Corporation to consolidate this remarkable improvement.
Mr. Okechukwu proposed the creation of a Joint Intervention Partnership with the NNPC, a package which he explained would help both organization seek a workable and mutually beneficial alliance for the common good of the larger population.
Welcoming the VON delegation to the NNPC Towers, Mallam Kyari said the NNPC was favourably disposed to innovative ideas and solutions that would help in effective execution of its mandate of superintending over the nation’s vast hydrocarbon resources for the benefit of all Nigerians and stakeholders.
While acknowledging the strategic role of VON in the Federal Government’s external information dissemination matrix, Mallam Kyari assured that the Corporation would continue to work towards steady improvement of its transparency and accountability quotient.
Egyptian Company To Build Solar PV Plants In Select African Countries
An Egyptian state-owned company, Arab Industrialization Organization (AOI) has announced that it will launch solar power plants in Uganda, Congo, Tanzania, Eritrea, Somalia and Southern Sudan, with capacities ranging from 2 to 4MW.
The company will be responsible for the design, financing, construction and operation of the plants.
The projects will produce electricity as well as desalination plants in targeted countries.
The initiative also benefits from a grant approved by the Egyptian government to the tune of $12 million.
Egypt boasts one of the most progressive renewable energy programmes in Africa, which has seen one of the world’s biggest solar parks come to fruition.
The Benban solar complex located in the city of Aswan in southeastern Egypt is one of the largest of its kind in the world at 1.65GW and is set to be completed by year-end.
The North African company also recently commissioned the 200MW Suez wind farm.
A second 252MW wind project recently achieved financial close.
Kosmos Hires Maersk Drillship For Equatorial Guinea Well
A Maersk Drilling-owned drillship has been hired by Kosmos Energy to drill an exploration well offshore Equatorial Guinea.
The drilling contractor said through its social media channels on Friday that its drillship Maersk Voyager had been signed by Kosmos Energy to drill the S-5 exploration well offshore Equatorial Guinea.
According to Maersk Drilling, the contract has been novated to Kosmos from Noble Energy after a one-well option was exercised on the rig’s current contract.
The rig owner added that the work is expected to start in September this year.
Noble Energy awarded a70 day contract to the Maersk Voyager drillship for operations in Equatorial Guinea earlier this year.
The contract started in 2Q 2019 and was scheduled to end in July 2019. The contract also included one one-well option.
Bassoe estimated that Maersk Voyager’s dayrate with Noble Energy was around $165,000.
Below is the tweet
Extended! Our drillship hashtag#MaerskVoyager has been signed by Kosmos Energy to drill the S-5 hashtag#exploration hashtag#well offshore hashtag#EquatorialGuinea. The contract has been novated to Kosmos from Noble Energy after a one-well option was exercised on the hashtag#rig’s current contract. Work is expected to commence in September this year. https://maerskd.co/Voyager hashtag#MaerskDrilling
MODEC Issues $1.1 Billion In Bonds To Refinance FPSO In Brazil
MODEC has announced that an affiliate has issued a project bond in the international capital markets outside Japan to refinance an FPSO chartered to the TUPI consortium led by Petrobras in Brazil, with the aim of strategically diversifying its financing sources for MODEC’s entire FPSO charter business.
In recent years, the number of FPSO charter projects simultaneously executed by MODEC is increasing and the scale of financing for these projects is also expanding.
In response to these changes in the business environment, the aims of issuing the project bond are to enhance MODEC Group’s financial stability by diversifying its financing sources for FPSO projects, as well as to secure financing flexibility for the future growth of the MODEC Group.
This project bond was issued for the FPSO Cidade de Mangaratiba MV24 which has been deployed and is currently in operation at the Iracema Sul (formerly Cernambi Sul) oil field, operated by Petrobras, in the giant “pre-salt” region offshore Brazil. The shareholders of Cernambi Sul MV24 B.V., which owns the FPSO, are MODEC, Mitsui & Co., Ltd., Mitsui O.S.K. Lines, Ltd. and Marubeni Corporation.
The FPSO is currently chartered by a consortium formed by Petrobras (65%), Royal Dutch Shell plc (25%) and Petrogal Brasil S.A. (10%) under a fixed-price charter contract that extends until 2034. The FPSO achieved the first oil production in October 2014 at which time, the 20-Year charter of the FPSO began.
MODEC was responsible for the engineering, procurement, construction, mobilization and installation of the FPSO, as well as a MODEC Group company in Brazil is providing operations and maintenance services for the FPSO. The FPSO, a best in class FPSO both globally and in Brazil, accounts for approximately 4% of Brazil’s daily hydrocarbon production.
The capital cost for the construction of the FPSO was originally financed by equity capital from the four Sponsors of Cernambi Sul MV24 B.V., as well as by project finance from the Japan Bank for International Cooperation (JBIC) and commercial banks. Proceeds from the issuance of the project bond were used to refinance the project finance and make a distribution to Sponsors.
This transaction marks the first project bond for an FPSO project sold in the Regulation S/Rule 144A market, and was sold to a broad range of international investors outside Japan, mainly in Europe and the United States. Total investor demand for the issue was approximately 2-times the issue amount of the $1.1 billion project bond. The strong reception for the bond in the international market highlights MODEC’s highly praised asset management capabilities as well as operations and maintenance for FPSOs.
MODEC is currently carrying out 11 FPSO charter projects simultaneously all over the world, and four more FPSOs are currently under construction. With diverse means of financing, which can be applied to both existing and new charter projects, MODEC is able to respond more flexibly to the recent burgeoning demand for FPSOs and thus establish a robust position in the FPSO industry.
Angola Selects Roadshow Facilitator For Upcoming Licensing Round
Global business information provider IHS Markit, has been selected by the National Agency of Petroleum, Gas and Biofuels of Angola (ANPG), to facilitate its upcoming hydrocarbon licensing round presentations in Luanda, Houston, London and Dubai during September.
IHS Markit last hosted previous hydrocarbon round promotions for Angola in 2005, and 2007-2008, which led to the largest signing bonuses on record for individual blocks.
ANPG, the national concessionaire for Angola, holds mineral rights for the exploration, development and production of liquid and gas hydrocarbons in the West African country, announced it will launch a bid round for the award of exploration and production rights for a total of 10 blocks in the following areas offshore Angola:
Namibe Basin—Blocks 11, 12, 13, 27, 28, 29, 41, 42 and 43
Benguela Sub-Basin—Block 10
The blocks, which are all considered frontier, currently have no hydrocarbon production.
During the upcoming roadshow presentations, ANPG will present technical details regarding the round, provide an overview of the geology of the blocks on offer, discuss fiscal terms, potential hydrocarbon reserves, the timeline for the rounds, qualification requirements and submission guidelines.
Several seismic vendors with seismic coverage of the blocks on offer, will also be present.
Angolan Government To Sell Stakes In 195 Companies
The share capital held wholly or partially by the Angolan state in 195 different companies will be sold between 2019 and 2022, under the Privatization Program, published in the Diário da República official bulletin, quoted by Jornal de Angola.
The program states that 175 companies will be sold via public tender, 11 by public auction and nine through Initial Public Offering (IPO), with the government expected to launch public tenders this year for 80 companies as well as one IPO.
In 2020, 81 companies are due to be sold through public tender, six through auction and three via IPO, and in 2021 and 2022 the remainder will be sold.
The most well-known companies involved in this process are state oil company Sonangol, diamond company Endiama and airline TAAG, the BCI, BAI, BCGA and Banco Económico banks, as well as financial companies ENSA Seguros and the Angola Debt and Securities Exchange (Bodiva).
Other companies listed for privatization include Sonangol’s airline, Sonair, airport management company Sociedade de Gestão de Aeroportos and Sonangalp, a fuel distribution company that is 51% owned by Sonangol.
Zimbabwe: Energy Minister Widens The Pool To Fill Board Vacancies
Zimbabwe’s Energy Minister, Fortune Chasi, has made an open call for applications from members of the public to submit their CVs for possible appointment to boards of State entities.
This appointment aims to do away with mismanagement, nepotism, and corruption in the country’s energy sector.
In an exclusive interview with NewZimbabwe.com, Chasi said the decision was made in order to help him widen his reach before making a choice on the candidate.
“The open call is going to help in the sense that it brings a broader range of people to choose from, not having a small group that is known just by myself. We have more people applying and we will conduct interviews and we can be able to identify skilled people that we need,” he revealed.
The energy minister added that he was also doing this to ensure transparency.
“Just to make sure that the process is open and transparent, and that there is a bigger pool from which to select board members rather than just thinking of people whom I know,” he said.
This development comes after Chasi decided to dissolve the Zimbabwe Electricity Supply Authority (Zesa) board. This decision was taken as Chasi felt that the board was not doing much to address the power challenges.
The Board has failed to “appreciate the urgency of the situation we are in”, he said.
The minister then assured that he will replace the board with people who do not wait for monthly or quarterly meetings to address power challenges confronting the nation.
US Gov’t Shows Appetite To Develop Industrial Dialogue With Africa On LNG
With record-breaking US gas production this year, and the promotion of gas as a ‘cleaner and cheaper’ energy source a continued priority for the current White House, the US Department of Energy is now looking towards Africa to develop opportunities in the exploration, production and monetization of LNG.
In the words of Energy Secretary Rick Perry, “increased amounts of US LNG on the world market benefit the American economy, American workers, and consumers and help make the air cleaner around the globe.”
Appetite for imported gas is growing steadily across the African continent. Just recently, South Africa announced plans to open its first LNG import terminal in 2024.
Meanwhile, US gas production is skyrocketing. Currently at 6 billion cubic feet (bcf) per day, production is forecast to grow to 10 bcf by the end of 2020.
This confluence of circumstance makes Africa a common-sense partner for the US, as it sets out to cement its position as an energy superpower.
As part of this mission, Assistant Secretary for Fossil Energy, Steven Winberg, would join 22 Pan-African ministers at the Africa Oil Week Summit in Cape Town this November.
He would use the event to share US energy policy points with the continent and outline a vision for deeper US commitment to Africa in the oil, gas and power sectors.
This vision looks set to encompass increased two-way trade and investment between the US and Africa, with the US making potential capital available on joint-ventures and to part-finance LNG infrastructure for energy-lacking African countries.
The announcement of Secretary Winberg’s attendance to the summit comes alongside several major US private-sector investments into the African energy sector.
ExxonMobil is making progress in Mozambique with its Rovuma LNG project in deepwater Area 4 block, which contains more than 85 trillion cubic feet of natural gas.
Particularly notable though is Anadarko’s recent announcement of its Final Investment Decision (FID) to construct a $20 billion gas liquefaction and export terminal in Mozambique, the largest single LNG project approved in Africa.
A representative from ExxonMobil would be covering the Rovuma LNG project in Mozambique at Africa Oil Week and, there would be strong presence from ENH and INP at the conference.
Africa Oil Week is putting a renewed focus on the place of gas, with 5 dedicated sessions dedicated solely to LNG in the event programme.
Assistant Secretary Winberg would be actively participating in the AOW Programme.
Source: www.energynewsafrica.com
Auditor General’s Report: We Have Honoured All Tax Obligations-GOIL
Indigenous Ghanaian oil company, GOIL, has dismissed claims in the 2018 Auditor General’s Report that it has defaulted in payment of levies to the state.
The Auditor-General, at a press conference, last week, accused some ten oil marketing companies including GOIL, for causing the state to lose about GHc33, 675,044 between 2016 and 2017.
“Our review of petroleum products lifted at TOR between November 2016 and November 2017 showed that 10 OMCs defaulted in the payment of excise duties, taxes and levies amounting to GH¢33,675,044,” a report from the Auditor General stated.
A data from the Auditor General showed that GOIL owed the state to the tune of GH¢27,688,000.
However, GOIL, in a statement signed by its public relations officer, rejected the claims and clarified the issue.
“Sometime in August last year, GOIL received a letter from the Commissioner, Customs Division of the Ghana Revenue Authority (GRA) in connection with a recovery of taxes and levies of petroleum liftings, covering the period January 2013 to December 2017 amounting to GHc19, 921, 401, 62.
“GOIL promptly responded by communicating to the GRA, using our analysed schedule to point out errors in declarations submitted to GOIL. GOIL specifically pointed out that all the declarations listed by the GRA had errors which could not be corrected via the GCNet system and therefore new declarations had to be made to replace them.
“Following that, GOIL was reliably informed by the GCNet that the erroneous declarations would be expunged from the records, after a month of the date of declaration,” the statement said.
It added that: “Our records which we have submitted to GRA therefore shows that GOIL has paid all taxes and levies of lifted petroleum products during the period indicated.”
GOIL said it found it strange that despite the clarifications, issues had been raised in Part three of the 2018 Auditor-General’s report under the heading: ‘TOR Default in the Payment of Petroleum Liftings’.
Specifically in item numbers 60 and 65, the report indicated that GOIL defaulted in the payment of excise duties, taxes and levies amounting to GHc 27,688,978.98 and MGO liftings amounting to GHS 497,490.
As further proof of non-liability, the GRA itself awarded GOIL the “2017 OVERALL BEST TAX PAYER (CUSTOMS DIVISION’ last year.
“We have, therefore, communicated to the GRA again and the Auditor-General’s office for the records to be formally corrected to reflect our current tax position and, in particular, clarify any misconceptions raised as a result of the publication of the Auditor-General’s report,” the company noted.
GOIL reiterated that it is a law-abiding corporate entity and has always paid its taxes promptly and regularly and will never renege in its obligations towards the state.
Source: energynewsafrica.com
Ghana: Why the Special Prosecutor (SP) Must Be Interested In PDS Saga
Since March this year, the Power Distribution Services (PDS) Ghana had been responsible for managing the retail, and distribution business of the Electricity Company of Ghana (ECG), following government’s decision to executed the second Millennium Challenge Compact (MCC) with the U.S. government with the objective of, inter alia, increasing private sector investment and the productivity and profitability of micro, small, medium and large scale businesses.
Among the six projects within the second compact is the ECG Financial and Operational Turnaround Project (EFOT), which seeks to introduce a private sector participant in the management and operations of ECG, and key policy and institutional reforms that will provide more reliable and affordable power to Ghana’s businesses and households, through Millennium Challenge Corporation’s US$498 million compact.
As a result the Millennium Development Authority (MiDA), the supervising agency of the MCC Compact, embarked upon a competitive procurement process which resulted in the selection of Manila Electric Co. (Meralco), a Filipino company and a group of Ghanaian investors to manage, operate and invest in ECG’s operations for 20 years, in the name of PDS as the Concessionaire.
Per the power compact transaction agreement, Meralco and its partners will hold 41 percent stake in ECG while the Ghanaian ownership is 51 percent. The consortium is comprised of Meralco, AEnergia SA, an Angolan company, and four Ghanaian companies, TG Energy solution Ghana Limited, Santa Baron Ventures Ghana, TBK Ghana Limited and GTS Engineering Ghana Limited.
Author
It was expected that the PDS would invest over US$580 million in Ghana’s power sector within the next five years after receiving the Assets and Operations of the ECG on March 1st 2019. ECG becomes an Asset Holding Company in this case, and after the end of the Concession, all assets would be transferred back to it.
Suspension
Everything seem going well for PDS, until on the eve of July 30th 2019, the government of Ghana through the Ministry of Finance (MoF) and the ECG announced the suspension of the concession agreement with the consortium with immediate effect, suggesting that the ECG is back to manage power distribution in the country.
As per the statement signed by the Minister for Information, Kojo Oppong Nkrumah, government’s decision follows the detection of “fundamental and material breaches of PDS’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence.” According to government, the Demand Guarantees were key prerequisites for the lease of assets on 1st March 2019 to secure the assets that were transferred to the Concessionaire.
While assuring the general public and customers that the development will not interfere with the distribution of electricity services, government indicated that it is conducting a full enquiry into the matter, and that the outcome will inform the next line of action.
Government’s statement was further reinforced by various functionaries of the state while they sought to shed more light on the issue.
According to the Minister of Energy Mr. Peter Amewu, an officer who executed the Guarantees (Lease Payment Security and BSA Payment Security) from Al Koot, a commercial insurer and re-insurer, based in Qatar was not authorized and that the guarantees were forged. This according to Mr. Amewu, was detected following series of due diligence tests the guarantees were subjected to by the ECG. Mr. Kojo Oppong Nkrumah also added that the company that issued the guarantee have indicated that the mandate to issue that guarantee was irregular. As a result, a full scale-inquiry has been launched by the government and the other organizations to unravel the extent of the breach and the necessary action to follow. To the extent that the deal will be cancelled if it emerges that there was a deliberate attempt to defraud the country.
And according to Deputy Energy Minister, Mr. William Owuraku Aidoo, initial investigations points to a grand plan to deceive the state, and that government is convinced that PDS misrepresented some of the requirement for the takeover.
Blames and Calls
There have been several calls by Ghanaians from all walk of life, and other development partners following the suspension of the concessionaire agreement, with each blaming the fallout on one person/group or the other.
The Africa Centre for Energy Policy (ACEP) has blamed MiDA for what it describes as the gross negligence in the award of the concession agreement. ACEP’s claim is that MiDA bent the procedures to create room for the consortium to win the bid even though they did not meet the conditions. It is also convinced that Government officials who played a role in the agreement signed between PDS and the government of Ghana, have questions to answer.
The Member of Parliament (MP) for Adansi-Asokwa and a former Deputy Minister for Energy, Mr. Kobina Tahir Hammond, has called for the prosecution of all those involved in the concession agreement with the PDS if it is proved that there was a fraud. The legislator who is also a Member of the Mines and Energy Committee, contends that the committee raised red flags on the deal but okayed it due to assurances from the government.
A former UN adviser on governance Prof. Agyemang Duah, has also said that the suspension of the deal by government few months down the line is an indication of a shoddy work done. He blames the government and some others officials for not doing thorough due diligence; suggesting that rushing major contracts worth millions of dollars will land the country in loses if care is not taken.
The U.S. Embassy in Ghana have also added their voice to the calls, by urging the government to conduct a thorough forensic audit into claims of fraud regarding its contract with PDS, in order to fully establish the facts of the matter.
The Place of Due Diligence
A former Chief Executive Officer of the Volta River Authority (VRA) Dr. Charles Wereko-Brobby has accused government for rushing to meet the deadline of the second MCC Compact. He believes the government should have done due diligence before signing the contract, instead of now trying to do the due diligent after the fact. To him, the country was forced to take the decision without necessarily satisfying certain preconditions.
On his part, Dr. Kwabena Donkor who is also a member of Mines and Energy Committee in Parliament and MP for the Pru East Constituency, accused the Finance Minister for not doing proper due diligence before bringing finality to the agreement with the PDS.
And in the view of ACEP, apart from Meralco the other parties in the consortium were not known, which was enough basis for MiDA to be meticulous in checking the background of the companies to ensure that they, at least, have the financial capacity to assume the business with a cash flow of US$4billion.
But both government and MiDA are fighting off the accusation that they were negligent in the exercise of their duties to thoroughly follow procedures and scrutinize documents presented by PDS before a final agreement was signed.
According to the Information Minister, it was rather Ghana’s diligence over the agreement that revealed the breach by PDS, arguing that the principle of due diligence has always been an ongoing process, and not an event. And that, the nature of the breach was such that it was difficult to detect at the initial stage.
MiDA also maintains it followed due diligence throughout the handing-over process, and that they did not massage the process. That, even though the parties agreed to waive some of the conditions precedent (which is allowed) and commit them as conditions subsequent, MiDA and the rest of the stakeholders suggested to government that “as for the guarantees until they have been issued, the transfer shouldn’t take place.”
Call on SP
The Special Prosecutor (SP) Mr. Martin Amidu may have turned down calls for his office to probe the PDS saga, with an excuse that the office of the SP has no mandate to investigate financial and economic crimes. However, there enough reasons for the SP to be interested in the entire concessionaire agreement which today is in total mess.
There is a case of circumvention of process for PDS to win the bid and take over the operation and management of the ECG, to the extent that “conditions precedent” were relaxed and made “condition subsequent. I am sure this may interest the SP to interrogate the extent to which due process was followed in the award of the contract. It may confirm or otherwise the considered opinion of some section of Ghanaians that the agreement was cooked from the very onset for someone, judging from the manner things were done in a rush.
That if the country paid $50 million in services, in advice – hiring lawyers, advisors, consultants to help with the takeover process, yet the country ends up with a suspended deal; it may be of concern to the SP, at least for purposes of “value for money.”
And to the extent that the PDS has so far not injected the needed financial capital as stipulated under the concession agreement, but rather been depending on ECG’s existing funds (including expected payments) for their operations and to shore up their capital requirements, amounts to a clear breach of the transaction. Wouldn’t this also interest the Special Prosecutor to call for the file on PDS concession agreement?
Source: Paa Kwasi Anamua Sakyi, Institute for Energy Security (IES) © 2019
Author
It was expected that the PDS would invest over US$580 million in Ghana’s power sector within the next five years after receiving the Assets and Operations of the ECG on March 1st 2019. ECG becomes an Asset Holding Company in this case, and after the end of the Concession, all assets would be transferred back to it.
Suspension
Everything seem going well for PDS, until on the eve of July 30th 2019, the government of Ghana through the Ministry of Finance (MoF) and the ECG announced the suspension of the concession agreement with the consortium with immediate effect, suggesting that the ECG is back to manage power distribution in the country.
As per the statement signed by the Minister for Information, Kojo Oppong Nkrumah, government’s decision follows the detection of “fundamental and material breaches of PDS’s obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further due diligence.” According to government, the Demand Guarantees were key prerequisites for the lease of assets on 1st March 2019 to secure the assets that were transferred to the Concessionaire.
While assuring the general public and customers that the development will not interfere with the distribution of electricity services, government indicated that it is conducting a full enquiry into the matter, and that the outcome will inform the next line of action.
Government’s statement was further reinforced by various functionaries of the state while they sought to shed more light on the issue.
According to the Minister of Energy Mr. Peter Amewu, an officer who executed the Guarantees (Lease Payment Security and BSA Payment Security) from Al Koot, a commercial insurer and re-insurer, based in Qatar was not authorized and that the guarantees were forged. This according to Mr. Amewu, was detected following series of due diligence tests the guarantees were subjected to by the ECG. Mr. Kojo Oppong Nkrumah also added that the company that issued the guarantee have indicated that the mandate to issue that guarantee was irregular. As a result, a full scale-inquiry has been launched by the government and the other organizations to unravel the extent of the breach and the necessary action to follow. To the extent that the deal will be cancelled if it emerges that there was a deliberate attempt to defraud the country.
And according to Deputy Energy Minister, Mr. William Owuraku Aidoo, initial investigations points to a grand plan to deceive the state, and that government is convinced that PDS misrepresented some of the requirement for the takeover.
Blames and Calls
There have been several calls by Ghanaians from all walk of life, and other development partners following the suspension of the concessionaire agreement, with each blaming the fallout on one person/group or the other.
The Africa Centre for Energy Policy (ACEP) has blamed MiDA for what it describes as the gross negligence in the award of the concession agreement. ACEP’s claim is that MiDA bent the procedures to create room for the consortium to win the bid even though they did not meet the conditions. It is also convinced that Government officials who played a role in the agreement signed between PDS and the government of Ghana, have questions to answer.
The Member of Parliament (MP) for Adansi-Asokwa and a former Deputy Minister for Energy, Mr. Kobina Tahir Hammond, has called for the prosecution of all those involved in the concession agreement with the PDS if it is proved that there was a fraud. The legislator who is also a Member of the Mines and Energy Committee, contends that the committee raised red flags on the deal but okayed it due to assurances from the government.
A former UN adviser on governance Prof. Agyemang Duah, has also said that the suspension of the deal by government few months down the line is an indication of a shoddy work done. He blames the government and some others officials for not doing thorough due diligence; suggesting that rushing major contracts worth millions of dollars will land the country in loses if care is not taken.
The U.S. Embassy in Ghana have also added their voice to the calls, by urging the government to conduct a thorough forensic audit into claims of fraud regarding its contract with PDS, in order to fully establish the facts of the matter.
The Place of Due Diligence
A former Chief Executive Officer of the Volta River Authority (VRA) Dr. Charles Wereko-Brobby has accused government for rushing to meet the deadline of the second MCC Compact. He believes the government should have done due diligence before signing the contract, instead of now trying to do the due diligent after the fact. To him, the country was forced to take the decision without necessarily satisfying certain preconditions.
On his part, Dr. Kwabena Donkor who is also a member of Mines and Energy Committee in Parliament and MP for the Pru East Constituency, accused the Finance Minister for not doing proper due diligence before bringing finality to the agreement with the PDS.
And in the view of ACEP, apart from Meralco the other parties in the consortium were not known, which was enough basis for MiDA to be meticulous in checking the background of the companies to ensure that they, at least, have the financial capacity to assume the business with a cash flow of US$4billion.
But both government and MiDA are fighting off the accusation that they were negligent in the exercise of their duties to thoroughly follow procedures and scrutinize documents presented by PDS before a final agreement was signed.
According to the Information Minister, it was rather Ghana’s diligence over the agreement that revealed the breach by PDS, arguing that the principle of due diligence has always been an ongoing process, and not an event. And that, the nature of the breach was such that it was difficult to detect at the initial stage.
MiDA also maintains it followed due diligence throughout the handing-over process, and that they did not massage the process. That, even though the parties agreed to waive some of the conditions precedent (which is allowed) and commit them as conditions subsequent, MiDA and the rest of the stakeholders suggested to government that “as for the guarantees until they have been issued, the transfer shouldn’t take place.”
Call on SP
The Special Prosecutor (SP) Mr. Martin Amidu may have turned down calls for his office to probe the PDS saga, with an excuse that the office of the SP has no mandate to investigate financial and economic crimes. However, there enough reasons for the SP to be interested in the entire concessionaire agreement which today is in total mess.
There is a case of circumvention of process for PDS to win the bid and take over the operation and management of the ECG, to the extent that “conditions precedent” were relaxed and made “condition subsequent. I am sure this may interest the SP to interrogate the extent to which due process was followed in the award of the contract. It may confirm or otherwise the considered opinion of some section of Ghanaians that the agreement was cooked from the very onset for someone, judging from the manner things were done in a rush.
That if the country paid $50 million in services, in advice – hiring lawyers, advisors, consultants to help with the takeover process, yet the country ends up with a suspended deal; it may be of concern to the SP, at least for purposes of “value for money.”
And to the extent that the PDS has so far not injected the needed financial capital as stipulated under the concession agreement, but rather been depending on ECG’s existing funds (including expected payments) for their operations and to shore up their capital requirements, amounts to a clear breach of the transaction. Wouldn’t this also interest the Special Prosecutor to call for the file on PDS concession agreement?
Source: Paa Kwasi Anamua Sakyi, Institute for Energy Security (IES) © 2019
PDS Saga: We’re Awaiting MiDA’s Forensic Audit Before A Decision Will Be Taken-US Embassy In Ghana
The US Embassy in the Republic of Ghana says it is awaiting an independent forensic audit of the Power Distribution Services (PDS) concession deal authorised by the Millennium Development Authority (MiDA) Board of Directors before it makes a decision on the matter.
According to the US Embassy, “U.S. Government strongly supports the decision” which it says is needed before any action is taken on the alleged fundamental and material breaches of PDS’ obligations to Ghana.
“Only then can all relevant parties make a transparent and evidence-based decision that is in the best interest of the citizens of Ghana,” the Embassy said in response to queries by Accra based Citi FM.
The queries, among others, concerned the role of the embassy and the Millennium Challenge Compact in possibly resolving the matter, potential actions if the government cancelled the deal and thoughts on alleged fraud in the deal.
The Embassy also assured that the US favoured a “transparent, well-run transaction that meets international standards for private sector participation, investment, and operations.”
“The U.S. Government expects that MiDA, PDS, and the Government of Ghana will continue to work together to implement the bold solutions and partnership of the MCC compact that have been fostered to enhance the reliability of the country’s power network and improve the lives of millions of Ghanaians.”
PDS took over the power distribution business from the ECG in March 2019 after winning a bid to run the power distribution in Ghana as part of the Millennium Challenge Account (MCA) compact which was signed in 2014.
However, barely five months of operations, the Government of Ghana, through the Information Minister, Kojo Oppong Nkrumah, announced the suspension of PDS.
In a statement, government said the suspension was as a result of what it described as ‘fundamental and material breaches of PDS’ obligation in the provision of Payment Securities for the transaction’ which had been discovered upon further due diligence.
The statement said a full-scale enquiry into the power concession agreement with PDS Ghana Limited had begun and was expected to last for 30 days.
World’s Largest Tanker Starts 12,400-Mile Journey To Meet IMO Regulations
The world’s biggest oil tanker has begun a 12,400-mile voyage to a fuel-storage zone in Asia, the latest movement of a vessel that’s intrigued the shipping market and fuel traders for months.
More than 1,200 feet long, 16 years old, and able to hold roughly a day of France’s and Britain’s combined oil consumption, Oceania will arrive at Sungai Linggi in Malaysia at the end of September, according to recent signals from the vessel. Its depth in the water and previous movements indicate the so-called ultra-large crude carrier, owned by Antwerp-based Euronav NV, has cargo on board.
Oceania, currently sailing past West Africa, has been accumulating cargoes in the Mediterranean Sea since about March. Euronav’s original plan was to use a supertanker to store fuel to help its fleet meet rules known as IMO 2020, which will force merchant ships to cut sulfur emissions. The company has declined to comment further on the matter multiple times. The vessel is Oceania, according to tanker-tracking data from Vortexa. When the ship arrives in East Asia, it will join an armada of carriers also storing products that will meet the regulations.
“This is unusual and certainly an interesting way of dealing with the IMO 2020 story,” said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. “It is not without risk. But it’s interesting, and it’s also a bit more sophisticated than the rest of the shipping companies.”
IMO 2020 Strategy
It’s hard to gauge Euronav’s exposure to price fluctuations since the company may have locked in future prices for the fuel, Haavaldsen said. The tanker owner said during an earnings call last week that it has borrowed an additional $100 million in relation to its IMO 2020 fueling strategy, adding that there would be a further briefing on Sept. 5.
Starting in January, the vast majority of ships will have to consume fuel containing less sulfur under the rules mandated by the International Maritime Organization in London.
IMO-compliant fuels will probably cost significantly more than the type that ships mostly use today, prompting some owners to invest billions of dollars in equipment allowing them to keep burning the current product. A majority though — including Euronav — have opted to switch to low-sulfur fuels.
The new rules will require vessels to limit sulfur content to 0.5%, down from 3.5% in most parts of the world today. The pollutant is blamed for causing acid rain and contributing to human health conditions such as asthma and even lung cancer.
Fuel Storage
By storing compliant fuel on its giant ship, Euronav could be able to ensure its own requirements are covered when the new rules kick in. Alongside its sister ship, the Europe — currently off the coast of Malaysia — Oceania has a bigger cargo capacity than any other vessel in the world, IHS Maritime data compiled by Bloomberg show.
Some of the world’s top trading houses earlier this year began to gather a fleet of tankers in Southeast Asia to receive, store and resell millions of barrels of products such as low-sulfur fuel oil, diesel and light-cycle oil in what would effectively be a mini supply-and-distribution hub out at sea.
More conventional sea-storage trades normally happen when oil markets are weak, driving down immediate prices below future ones. When that price gap grows so wide that it exceeds the cost of hiring a tanker, traders can park cargoes at sea and sell them later at fixed profit.
It’s harder to say how easily Euronav would be able to lock in any profit on Oceania because the exact specification of fuel on board remains unclear. Not everything on Oceania is an oil product, either. The most recent cargo loaded onto the ship was low-sulfur crude from a field in the North Sea. It’s unclear how that fits in with the fuel the vessel previously loaded.
“With this IMO stuff everyone is going into uncharted territory, and I mean everyone,” said Steve Sawyer, director of refining at Facts Global Energy.
Source: offshoreenergytoday.com
Ghana: Your Support Is Key To Success Of Cylinder Recirculation Model- Deputy Minister Tells Residents Of Tamale
Ghana’s Deputy Minister for Energy in charge of Petroleum, Dr. Mohammed Amin Adam, has appealed to consumers of LPG products in the northern part of the country to support the Cylinder Recirculation Model (CRM) policy, being implemented by petroleum downstream regulator, NPA, to address the issue of petroleum fires in the industry.
The National Petroleum Authority (NPA) had a stakeholder’s meeting with residents in the Tamale metropolis to interact with them about the policy and also take their questions, suggestions and feedback, as part of a long period to roll out the policy.
The Authority is expected to undertake a pilot exercise in Obuasi, Kweibibirem and Kade in the Eastern Region, before the entire programme is rolled out across the country.
So far, LPG consumers in the Greater Accra, Ashanti, Western and Central regions of the West African country have been engaged on the policy.
Those in the Upper East Region also had their turn on Tuesday, August 13, 2019.
Interacting with residents in the Tamale Metropolis in the Northern Region, Dr. Amin Adam indicated that the policy is not necessarily new, since it has been done some years ago, stating that “this is why Ghanaians must embrace it, despite the fears being expressed by a section of the public.”
“This policy will not succeed without you (consumers), the citizens of Ghana, who are primary users of LPG products,” he said.
The NPA, he said, is well positioned to carry the policy acknowledging that the contributions at such forums, means we would “succeed as a country.”
Dr. Amin assured industry players that the policy would not result in any job losses, as it is being speculated.
“There are many people who say we are going to create unemployment through this policy…I want to assure you that this government will be the last to kick people out of their jobs,” he said.
The Northern Regional Minister Salifu Sa-eed, who was also at the programme, admonished the residents to embrace the policy, since it would help address the health challenges associated with the use of wood fuels in the region.
On his part, Chief Executive of the NPA, Hassan Tampuli, reiterated his outfit’s commitment to continue soliciting the views of consumers in the country, before the policy is fully implemented.
Gabriel Kumi of the LPG Marketers Association, who indicated his outfit’s preparedness to work with the NPA, appealed to the government to have a look at the tax components on LPG products, as it would help open up the market and boost consumption.
Source: energynewsafrica.com
Those in the Upper East Region also had their turn on Tuesday, August 13, 2019.
Interacting with residents in the Tamale Metropolis in the Northern Region, Dr. Amin Adam indicated that the policy is not necessarily new, since it has been done some years ago, stating that “this is why Ghanaians must embrace it, despite the fears being expressed by a section of the public.”“This policy will not succeed without you (consumers), the citizens of Ghana, who are primary users of LPG products,” he said.
The NPA, he said, is well positioned to carry the policy acknowledging that the contributions at such forums, means we would “succeed as a country.”
Dr. Amin assured industry players that the policy would not result in any job losses, as it is being speculated.
“There are many people who say we are going to create unemployment through this policy…I want to assure you that this government will be the last to kick people out of their jobs,” he said.
The Northern Regional Minister Salifu Sa-eed, who was also at the programme, admonished the residents to embrace the policy, since it would help address the health challenges associated with the use of wood fuels in the region.
On his part, Chief Executive of the NPA, Hassan Tampuli, reiterated his outfit’s commitment to continue soliciting the views of consumers in the country, before the policy is fully implemented.
Gabriel Kumi of the LPG Marketers Association, who indicated his outfit’s preparedness to work with the NPA, appealed to the government to have a look at the tax components on LPG products, as it would help open up the market and boost consumption.
Source: energynewsafrica.com