Monday, 21 October 2019

Gov't failed to protect Ghana's interest in Aker deal



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Adnan Adams Mohammed

Energy expert has severed the President Akuffo Addo administration for failing to protect the interest of Ghana in the deal it signed with Aker Energy.

Former Boss of Ghana National Petroleum Corporation (GNPC), Alex Mould reiterated his stands on the Aker deal which started under his supervision that, the NPP led government did not serve the interest of Ghanaians for rejecting an additional 10 percent carried and participation that GNPC negotiated for and budgeted to pay. The additional 10% would have increased Ghana's interest in the biggest oilfind block in the country.

When asked by host on TV3 Hot Issues program last week on whether the government failed to protect the interest of Ghanaians in the Aker deal? The energy and financial expert responded yes.

"With regards to this particular issue, yes."

He explained that, “when I was at GNPC, we signed an agreement with Hess (initial owners of the block) and that agreement was very clear. It says, GNPC will pay for 10% of shares once ITLOS case was over (which started in 2014 and ended in 2017). If it ended in 2016, I would have paid for the 10% but it didn't end under my watch.

"It (ITLOS case) ended in 2017 under NPP who was supposed to pay for the 10% but never paid for the 10%. And that 10% is equivalent to US$2-3 billion now. We were going to pay US$40 million.

"So my question is, why did we (government of Ghana) not pay for the 10%?"

He noted that this still bevels his imagination. "And that is what I think is wrong and I believe it is 'state capture' because anybody who is truly a  Ghanaian will not want the 10% that is due the country to be given to a foreigner or somebody in the private sector. It is stealing assets from the state and giving it to the private sector. I believe that is wrong."

Already, other policy think-tanks like IMANI Africa, ACEP and the Minority National Democratic Congress (NDC) Caucus in Parliament had contested the Aker Energy Petroleum Agreement when it was registered in the Petroleum Block register.

They noted that, the Aker petroleum agreement will not inure to the benefit of Ghanaians and the earlier it is withdrawn and reviewed the better. Yet, nothing new has come out of it so far.

According to them, the stake of the country in the original agreement which was brokered by the previous government headed by Mr. John Dramani Mahama, has been slashed down by 25% in favour of Aker Energy, the new owner of the oil block.

The Minority Leader, Haruna Iddrisu in a press conference in Parliament, in May 2019 said, the action by the Akufo-Addo-led government clearly demonstrates that they have ceded Ghana’s petroleum interests to foreign hands.

“Instead of protecting the public purse and ensure that the citizenry benefits from the country’s petroleum resources, the current government has demonstrated beyond reasonable doubt that it is more concerned in protecting foreign interest to the detriment of the collective national interest”, he noted.

In a separate interview with Economy Times, Mr. Alex Mould further showed signs of disappointment. He could not understand why GNPC would write to Hess informing them that it would not exercise the option to purchase the 10% interest in the Block due to lack of funds when GNPC had over US$150million in cash on their balance sheets as of the end of 2016, he said

Mr. Mould opined that the decision not to exercise the option of purchasing the 10% interest could never have been in the best interest of the country and therefore amounted to causing financial loss to the state.

“Considering what GoG stood to gain from the 10% interest, one cannot help but wonder why all options and possibilities were not exhausted before getting to this point. For example, was there any economic analysis done by GNPC to validate why the 10% interest should not be taken up? Was Approval sought from Minister who had given GNPC the original approval to pay for the 10% Interest in the Block? If so, did Minister get his approval from Cabinet? Was the Minister of Finance aware that GNPC had turned down an option to acquire 10% of the Block? Because if the issue alone was that GNPC did not have the funds then MoF could have been asked to fund on behalf of GoG. Lastly was Parliament informed that GNPC would not take up the option?? If the answer is no to any of these questions then the letter that was sent to Hess/Aker was illegal as it did not have the authority to say that GoG was no longer exercising the option to purchase the 10% Interest in the Block.”

Background

In 2014 when Lukoil bought interest in Hess Block (DWT/CPT) Government negotiated and agreed with Hess on granting GoG an option to acquire 10% of the Block .

The Minister approved the Lukoil farm-in into the DWT/CTP Block Operated by Hess in 2014 on two main conditions:

That they needed to abide by new law that required a local partner should take up a minimum of 5% ; this was despite the fact that Hess themselves were grandfathered just as Tullow, Kosmos and Eni were

The second condition was that government would increase its Interest from the original 10% Carried to 20% by taking an option to acquire a 10% paid Interest.

GNPC was designated as the government entity to handle acquisition and formed a subsidiary called EXPLORCO to hold GoG’s additional interest, with the aim of maximizing Ghana’s revenue from the find.

In 2017, government through GNPC however wrote to Hess that it was no longer interested in purchasing the 10% paid interest due to lack of funds.

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