Tsatsu Tsikata’s ordeal in Kufuor’s hands awaiting GNPC cartel ..As multi billion dollars unexplained deals takeover corporations books

October 12, 2022

The public oil corporation, has an interesting history in the political records of Ghana. In 2008, a former Ghana National Petroleum Corporation (GNPC) boss was jailed for causing financial loss to the state to the tune of a paltry GH¢230, 000 , but today deals running into billions of US dollars are being hatched every now and then in the name of the Corporation with recklessness.

Even though, Tsatsu Tsikata, was subsequently acquitted on appeal, it is essential to note that some political apostles in the Kufuor government thought they were more interested in public finances, hence spent their entire 8-year term in court to jail a former Chief Executive Officer (CEO), and did so exhausting the hierarchy of the court system of Ghana.

Today, we have seen deliberate mismanagement and dissipation of GNPC resources by successive GNPC bosses without accountability.

Last week, the Africa Centre for Energy Policy and Imani Africa, released a report highlighting a deliberate attempt to cause financial loss to the state.
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The corporation plans to spend US$195 million in projected losses in one year. The think tanks assess that these are avoidable losses if the managers of the Corporation and the government, including Parliament, are willing to avoid these losses.

The Herald note, in particular, many of the expenditure items have been flagged in our previous publications to warn the government of the fiscal threat such expenditures could have on the country if the government allowed GNPC to embark on them.

Coincidentally, President Nana Akufo-Addo, was the Attorney-General and Minister of Justice in the John Kufour government, who initiated the criminal trial of Mr Tsikata.

Prosecution’s Case in the Tsatsu Tsikata trial

The facts of “this historic political trial” as some prefer to call it, according to the prosecution are that GNPC, then headed by Tsatsu Tsikata, in March 1991, guaranteed a loan agreement for Valley Farms Limited, a mainly cocoa –farming company started by Mr Jim Wilson, an American citizen, who has been in Ghana, for more than four decades.

To enable Valley Farms expand some cocoa farms it had acquired from Ghana Cocoa Board, when they were put on divestiture by COCOBOD, the Managing Director of Valley Farms, Mr Jim Wilson, went to Merchant Bank in 1987 to seek help in raising financing for the company.

It was Merchant Bank which brought in GNPC as an equity partner, according to Mr Wilson and recommended the corporation to the management of Valley Farms, which accepted the recommendation.

Indeed, the evidence was that it was Investment Holdings Ltd, a subsidiary of Merchant Bank, which operates as a trust corporation, which was one of the original shareholders in Valley Farms and remained the shareholder even after GNPC expressed interest in acquiring the shares and authorized Investment Holdings to act on its behalf.

Mr Wilson, revealed to the Fast Track High Court how Valley Farms went as far as Abidjan, Cote d’Ivoire in search of financing at the Africa Project Development Facility (APDF), an international development agency in that country under the International Finance Corporation (IFC), a subsidiary of the World Bank.

It was through APDF that the French development agency, Caisse Centrale at the time, (now Agence Francaise de Développement) got interested in Valley Farms Limited, according to Mr. Wilson, and after various feasibility studies, decided to take equity in the project and to provide the loan.

Mr Wilson also testified about how, after Valley Farms got the loan, disbursements were made for various aspects of the project with receipts being provided to Caisse Centrale, before more funds were provided.

Mr Wilson, a prosecution witness in the case, significantly told the Fast Track High Court, that the company is in “a very healthy condition at the moment” and poised to make profit for all shareholders to enjoy.

Under cross-examination by one of the lawyers for the accused, the late Major (Rtd) R. S. Agbenoto, Jim Wilson, described the future of the project as: “Very bright”

He stated that both he (Mr Wilson), and Mr Tsatsu Tsikata, saw the Valley Farms project, which involved developing a special variety of high quality cocoa as being very beneficial for the country.

He also testified that GNPC paying up the Caisse Centrale loan when they were asked as guarantors to pay put GNPC in the shoes of the lender and Valley Farms acknowledged its liability to the Corporation.

Enter Akufu-Addo’s GNPC

Since 2017, GNPC, has been looking to import LNG to Ghana. At the time, the previous NDC Government had contracted West Africa Gas Limited (WAGL) to supply additional gas to Ghana’s power sector, to provide cheaper fuel for power generation.

The WAGL LNG regasification vessel arrived in Ghana in December 2016. After the change in power IN 2017, the new NPP Government was not interested in pursuing the agreement signed and approved by parliament. They ignored the contractors, and the vessel sat at the port of Tema for more than a year. As a result, gas could not be supplied to power plants. Subsequently, some load shedding occurred in 2017 and 2018 because of fuel supply constraints while the vessel was idling at the port.

The contractors subsequently headed to the International Court of Arbitration and won a US$78 million judgement debt against the state. It turns out that the reason the government was not interested in the WAGL contract was that the family of the President, through West Coast Ghana Gas (GCGG), was handed a single agency right to source LNG to Ghana.

It is important to note that, per the technical assessment done by the Energy Ministry of the previous government through the gas Master plan, the critical period for LNG was between 2017 and 2018. Beyond that, the Italian company, Eni was going to produce domestic gas to meet demand. However, the decision to cancel the WAGL contract made Ghanaians endure load shedding and eventually got a judgment debt of US$72 million.

Since 2017, GCGG has struggled to commission its Tema LNG project. In 2022, GNPC is telling Ghanaians that the Corporation will spend US$52 million on terminal availability charges. This means that even though gas will not be supplied to Ghana, GNPC will have to pay US$52 million to the president’s family. At this rate, one can only hope for a day of reckoning. It is bizarre that Ghanaians will continue to pay the president’s family every year though LNG is not needed in the current scheme of things.

Beyond LNG, the current Management of GNPC is committed to pursuing the wasteful adventures of the previous management.

The corporation intends to spend more than US$60 million outside its core mandate, worse than the GH¢230, 000 the NPP government in 2008 got Justice Henrietta Abban to jail Tsatsu for.

The current GNPC management, also intends to borrow US$500million and sell Ghana’s oil for $65/barrel for five years when the oil price is about $90/barrel.

This haemorrhaging of the state institution can only await a redeemer to subject public officials and cronies of government to strict accountability in the near future.

The Africa Center for Energy Policy (ACEP) and IMANI-Africa have in the latest write-up on the deal said that “the operations of GNPC raise significant debt concerns. Cumulatively, the Corporation’s actions could cost Ghana between $5 billion and $6 billion in the short to medium term, adding “in 2022 alone, the Corporation programmes to make a loss of $195.25 million.

“While it shows loss-making ventures in its work programme, the Corporation seeks to hide profitable businesses offshore. A case in point is the 7 percent interest in Jubilee and TEN fields hidden in the Cayman Islands through Jubilee Oil Holdings Limited (JOHL) and seeking to collateralize the asset for loans.

“GNPC buys gas at $6.08/MMBtu and sells to its favourite, Genser, at $2.79/MMBtu, which would further be discounted to $1.79/MMBtu in an amended agreement for 16 years, creating a direct subsidy of $1.5 billion.

“According to GNPC, Accounting for Genser subsidy means the cost of gas for the market should be $7.9, not $5.9 as approved by PURC. This creates a gap of $3.6 billion to the sector if PURC does not increase the tariff to punish other consumers.

“GNPC enjoys significant government support and Parliamentary oversight failure to perpetuate these loss-making adventures. It is even worrying to note the complicity of the Ministry of Finance, which is currently in talks with the IMF for a bail-out far less than the orchestrated losses of between US$5 billion and $6 billion from GNPC’s decisions. It tells why some have little faith in an IMF deal if we get one.

Genser, is owned and run by Nana Osae Nyampong and Baafour Asiamah-Adjei, the father and brother, respectively of the Akuapem North MP, Nana Ama Dokua Asiamah-Adjei of the New Patriotic Party (NPP) who is also a Deputy Minister of Trade and Industry in the Akufo-Addo government. The owners of Genser are mentioned as top financiers of the NPP.

More to come!

Written by Web Master

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