AG Brace Up Against Balkan Energy

Hardworking Attorney General, Marieta Brew Appiah-Oppong is bracing up for a fight with Balkan Energy saying Ghana is “not down and out” yet.

The Court of Arbitration in Hague, few days ago slapped US$12 million on the country for abrogating a contract with Balkan Energy for the operation of the Osagyefo Barge.

But the soft-spoken AG, who has in recent time succeeded in winning many judgment debt cases brought against government, with her team of lawyers, confirmed the ruling by the Court of Arbitration at a press conference held in Accra, yesterday.

Balkan Energy was awarded the amount on April 1, 2014, after years of arbitration.

Mrs. Marrieta Brew Appiah-Oppong said, she was bound by the rules of arbitration not to disclose the details of the arbitration, Joy News’ Fred Smith reported.

The company turned to the Court of Arbitration to settle a dispute that had risen with the government of Ghana over the administration of Osagyefo Barge.

The 125 MW barge-mounted gas-turbine electric power generating station was located at Effasu in the Western Region of Ghana.

The 77 m long barge is equipped with a pair of single-cycle heavy-duty gas turbine units that have a combined generating capacity of 125 MW. It is designed to burn either natural gas or diesel fuel.

In July 2007, the government of Ghana entered a 20-year lease agreement with the company, Balkan Energy Ghana, to refurbish and operate the power barge, initially using diesel fuel and later using gas to be delivered by the West African Gas Pipeline.

Balkan Energy promised to begin operations within 90 days after the lease agreement had been signed. They were also expected to increase the barge’s generating capacity by 60 MW, bringing it from its current capacity of 125 MW up to 185 MW.

But the company failed to honour its obligations due to several factors.

The government of Ghana then sued the company and by extension nullified the contract entered into with the company. Balkan then went to Hague to seek justice and demanded $2 billion damages.

The International Court of Arbitration ruled in their favour but handed a $12 million fine instead of the amount originally demanded against the government of Ghana.

The Attorney General stated, however, that per the ruling, the barge now becomes the property of Ghana. She said, the government will liaise with its external solicitors to take a second look at the judgement.

Meanwhile, the AG writes that “in a substantial decision issued on Tuesday, April 1, the Permanent Court of Arbitration in The Hague rejected claims against the Government of Ghana, brought by project developer Balkan Energy (Ghana) Limited, an affiliate of Texas-based Balkan Energy Company.
Balkan had claimed damages totaling more than $3 billion US based on a totaling fees provision in a long-term power purchased agreement entered into in 2007 between Balkan and the government’s Ministry of Energy (PPP).

While uploading the validity of the PPA, the tribunal found that Balkan had failed to perform it obligation under the PPA, which required Balkan to refurbish and commission the Osagyefo Power Barge, a 125 dual fired power barge and associated facilities in Effasu in the Western Region.

The tribunal also rejected Balkan’s claim for over $40 million US in damages for unjust enrichment. The tribunal concluded that the evidence did not demonstrate that Balkan had conferred any demonstrable benefit on the Government.

Instead, the tribunal awarded Balkan Limited damages of $12 million US for work performed and rejected the bulk of Balkan’s claim of alleged expenditure.

Finally, the tribunal held that the PPA was terminated and returned the control of the Barge to the Government. The Government was further awarded $300,000 US in damages, the maximum amount of damages that it could award the Government under the PPA. The tribunal determined that the cost of the arbitration are to be shared between the parties.

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