Ghana Goes Down Again! …As Balkan Energy Wins $12m Judgment Debt

Impeccable information reaching The New Crusading GUIDE indicates that the Ghana Government has been asked to pay a hefty amount of US$12 Million to Balkan Energy Company (BEC) for abrogating the disputed Osagyefo Barge contract.

According to the information, the International Court of Arbitration in The Hague, The Netherlands, this week pronounced judgment on the disputed Osagyefo Barge which has for years been idling away at Effasu in the Western Region as a result of a long-running battle between the Government and Balkan Energy over certain terms.

Although Balkan Energy was claiming almost US$2 Billion for the abrogation of the contract, the source said the Court took cognizance of some rulings by Ghana’s Supreme Court on some cases to slash down the demands to “just” US$12 Million. “In fact the International Court looked at how our Supreme Court had ruled on local/international contract cases and came to that decision. What is more refreshing is the fact that the Osagyefo Barge is to be the property of Ghana”, the source told this paper yesterday.

The Balkan Energy Company signed the 20-year contract agreement with the government in 2007 to equip, refurbish and commission the barge as well as its associated facilities within a 90-day period at a cost of US$40 million.

The contract was part of policy options pursued by the Ghana Government to stem the power shortages in the country at the time.

The barge was purchased by the Ghana government in 1999 and was conveyed to the country in 2002. It was built in Italy with a Japanese loan of US$110 million, but the thermal plant sat at an Italian Port for two years, attracting a fee of US$10 million before being moved down to the Sekondi Naval Base, where it remained for yet another two years because the landing bay at Effasu, its previous final destination, was silted.

However, upon arrival, the Ministry of Energy demanded to carry out a financial and technical audit to assess the requirements necessary to bring it on-stream. This hit a snag as the company refused the request.
But before the dispute travelled to The Hague, Balkan Energy had also contested the legitimacy of the Power Purchase Agreement that leased the Osagyefo Power Barge to it in 2007 to operate.

Under the Power Purchase Agreement (PPA), 125-megawatts Osagyefo Barge was leased to Balkan Energy Ghana, wholly owned by Balkan Energy Company LLC, to commission within 90 days of an effective date defined in the agreement, repair, rehabilitate the barge.

It would be recalled that in the year 2012, the Supreme Court of Ghana by a unanimous decision, ruled that the Power Purchase Agreement (PPA) dated July 27, 2007 between the Government of Ghana and Balkan Energy Ghana Limited that gave the former a lease agreement on the Osagyefo Power Barge, was an international business transaction.

The Court, presided over by Justice William Attuguba, gave the landmark ruling after it assumed its original jurisdiction of interpreting what the meaning of “international business transaction,” in accordance with Article 181(5) of the 1992 Constitution that had become a bone of contention, a case in which the state had sued Balkan Energy Company LLC, Balkan Energy Ghana Limited, and Mr. Philip David Elders, an American, at the High Court (Commercial Division)

The ruling, read by Justice Date-Baah, also viewed the arbitration provisions contained in clause 22.2 of the Power Purchase Agreement (PPA), dated July 27, 2007, between the Government of Ghana and Balkan Energy (Ghana) Limited, as not constituting an international transaction.

The rest of the panel members who sat on the case, include Justices Julius Ansah, Mrs. Sophia Adinyira, Annin Yeboah, Sule Gbadegbe, and Mrs. Vida Akoto-Bamfo.

According to the Court, the transactions entered into had elements that made it an international transaction, noting that Balkan Energy Ghana Limited was a wholly-owned subsidiary of Balkan Energy Company LLC, incorporated in the United Kingdom, and established by Mr. Philip David Elders, an American investor.

Additionally, the Court indicated that the amount involved in such transactions are significant and quoted in foreign currencies, with the principal partners resident abroad.

It further asked Parliament to enact a bill indicating what constitutes and International Business Transaction, in order to set parameters that would be followed in any such transaction.