Ghana-ENI deal bloated by over $2 billion – Minority

The Minority in Parliament has accused government of paying in excess of $2 billion in the gas exploitation deal with Italian oil firm ENI.
The Minority’s claim comes despite repeated assurances by the government that the $7 billion Ghana-ENI gas deal is in the best interest of the country.
The Member of Parliament (MP) for Afigya Kwabre South, Mr William Owuraku Aidoo, said at a press conference in Parliament on Thursday that the government had signed a bad deal.
“It is difficult to fathom the considerations that went into this agreement which by every standard is skewed, shoddy and appalling. The negotiators for the state perhaps did not have the requisite competence to deal with the contractors,” he said.
“It is safe to conclude, given the enormity of the matter, that some corruption might have influenced the negotiators to enter into such a bad agreement. Any of these does not exonerate the government and GNPC from blame. The government/GNPC-ENI/VITOL agreement simply stinks and it is difficult to comprehend why negotiators will subject Ghana to such a raw deal,” he said.
Mr Aidoo said: “We are estimating that government of Ghana is probably overpaying by more than $2 million. It’s the negotiation. I don’t know which negotiators went to speak on behalf of Ghana, and what interest there was. Looking at the agreement and the analysis that has been done, we believe it is too skewed against Ghana.
“…there is a clause in the original Petroleum Agreement (PA) that in case there is no agreement with the two parties, one party can walk away without any repercussion. These are hard knock businessmen who are in business for money and if they can squeeze a lot more than they have agreed previously from you, they would. We are saying that government of Ghana negotiators encapsulated under the pressure and gave them all these guarantees.”
Mr Aidoo’s party, the New Patriotic Party (NPP), claims that the ENI-Sankofa 20-year gas deal for the exploitation of the Offshore Cape Three Points Block (OCTP), does not give Ghana value for money.
The government has, however, rejected those claims.
READ More: Government responds to NPP concerns on $7 billion ENI-Sankofa deal
Negotiation ‘defects’
Mr Aidoo, who is also a member of the Mines and Energy Committee of Parliament, said the contracted provision of 20 per cent return on investment offered to ENI/VITOL instead of the normal 12.5 per was an unusually high rate for commercial transactions of that nature, especially as the government and GNPC assumed all the risk in the project.
He said another “overgenerous concession” that the state had offered to ENI/VITOL in the agreement was the at least $125 million tax incentive which Ghana was required to provide.
Besides, he said, GNPC was obliged to make additional upfront cash payment of $125 million in order to bail out the contractors in the event of a shortfall in revenue.
Mr Aidoo said the government was also obligated by specific provisions in the agreement to issue $100 million sovereign guarantee to pay for the shortfall in case GNPC also defaulted, indicating that “these risks are too high for the state and overexposes the country.”