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/ OFFICE OF THE ATTORN Ye In case of Reply the number and date or this GENERAL & MINISTRY O! coe letter should be, quoted P.O. BOX MB 60 eee ACCRA Ret, No. OS7/SF 69" ? REPUBLIC OF GHANA 27" November 2017 Fax No.: +233 302 667609 Tel No.: +233 302 665051 HON. BOAKYE AGYARKO THE MINISTER MINISTRY OF ENERGY MINISTRIES ACCRA ; Dear Colleague, RE: REQUEST FOR LEGAL ADVICE ON GOVERNMENT DECISION TO SUSPEND MONTHLY PAYMENTS TO AFRICA & MIDDLE EAST RESOURCES INVESTMENT GROUP LLC (AMERI) We refer to your letters dated 19" May, 2017 and 31" October, 2017 respectively as well as Ss Pate AAA Starrcthen fin &eon on the above subject matter. The letters under reference request the legal advice of the Attorney-General on: . the decision of Government to suspend monthly payments to Africa & Middle East Resources Investment Group LLC (Ameri). b. the necessity or otherwise of obtaining a court order in support of the suspension of payments and ¢. to determine whether the case should be adjudicated in Ghana or externally. We have examined the relevant documents accompanying the letters for the request for advice and make the following observations: af we Agreement 4, Circumstances under which payments may be suspended under the BOOT tion 24(b) of a Build Own Operate & Transter (BOOT) Agreement dated February 2016 executed between the Government of Ghatia (GoG) and Ameri (the Agreement), GoS may be released from any and all obligations under the Agreement upon termination ‘subject to certain exceptions, Section 24(a) provides that GoG may terminate the Agreement under consideration upon the occurrence of force majeure (section 20) and default by Ameri (section 23), Section 23 (c) of the BOOT Agreement provides as follows: Ww. “Amen WWW atarimen ling-69 fi nS eemene (an “Ameri Energy Default") upon occurrence of any of the following events: @ 7) failure to perform or observe any covenant, conditian or agreement to be performed or observed by it under this Agreement (only with respect to a material obligation for which this agreement does nol provide exclusive remadies);provided that (A) the GoG shall first have provided Ameri Energy with written notice of such breach and of the GoG's intention to terminate this agreement a result of such breach, and (B) Ameri Energy shall have failed within ‘thirty: (20}days ‘alter receipt of such'hatice for such extended period as is considered reasonable by the Parties) either (1) to commence to cure such breach and diligently thereafter to pursue such cure or (2} to provide reasonable evidence thal no such breach has occurred. any representation or warranty made by Ameri Energy in this Agreement or in any document or certificate furnished by Ameri Energy in connection with this agreement or pursuant to this agreement shall prove to be incorrect at any time in any material respect and sucn failure shall continue unremedied for a period of thirty (30) days after written notice thereof by the GoG." af From the above quoted sections GoG can suspend and or terminate monthly payments to Is under the Agreament and Ameri has failed and or refused to Ameri whete the latter de remedy such cetiult Itts worthy of note that no allegation of either a delault or a breach under the BOOT Agieement on the part of Ameri has been made by GoG. Indeed, Ameti, has provided and continues 10 provide power for the use of GoG in accordance with the Agreement, albeit through its agent, Power Projects Sanayi Insaat Ticaret Limited Sirket WWW.Starrfmonline.com 2. Procurement A study of the documents mace available to this Office indicates that the BOOT Agreement was originally purportedly entered into on a sole source basis. The Public Procurement Act 2003 (Act 663) as amended pravides the circumstances under which procurement for goods, works or services may be done on single or sole source basis, Section 40 of ‘the Public Procurement Act 2003 (Act 663) as amended by the Public Procurement (Amendment) Act 2016 (Act 914) provides as follows, “A procurement entity can engage in a single source procurement under section 44 Board in the fallowing exceotinna! circumstances, with the appsoval of | (a) wisre goods, works ar services are only available from a particular supplier or contractor, or if a particular supplier or contractor has exclusive rights in respect of the goods, works or services, and no reasonable alternative or substitute does not exist; (0) where there is an urgent need for the goods, works or services and engaging in tender proceedings or any other method of procurement is impractical due to unforeseeable circumstances giving rise to the urgency which is not the result of dilatory conduct on the part of the procurement entity; (©) where owing (0 a catarstiontuc event, the re ts an urgent need for the goods, works making it impren or techincal | to use any other methods of procurement bee 7 OF the: tine involved i isin those mothodds, NNN procKed goods, equpmant, tuclnology OF fom a supplier, contractor or consutant, detemmes that additional supplies must be procured trom the supplier, conteactoy oF consultant because Of (df) when the procurement entity service Standardization Or conpatibitiy with exising goods, equipment, twchinology of services taking into account www, Starrfmonline.com the effectiveness of the original procurement in mealing the feeds of the procurement entity; the limited size of the proposed procurement in sefation to the original procurement iii the reasonableness of the price and iv. the unsuitability of alternatives to the goods or services in question. (e) Where the procurement entity seeks to enter into a contract with the supplier or contractor for research, experiment, study or development, excep! where the contract includes the production of goods in quantities to establish commercial viability or recover research and development costs: or () Where the procurement entily applies this Act for procurement that concerns national secutily, and determines that single-source procurement is the most appropriate method of procurement. (2). A procurement entity may engage in single source procurement with the approval of the Board after public notice and time for comment where procurement from a particular supplier or contractor is necessary in order to promote a policy specified in section 59/4) (c), (0), or 69 (2) (¢} (i) or socio-economic policy and procurement from another supplier or contractor cannot promote that policy.” For the BOOT Agreement to be valid on the basis of single source procurement therefore, at feast one of the exceptional circumstances provided under section 40 of Act 663 as amended must’ have existed and the procuring entity must have received approval from the Board of the Public Procurement Authority. It does appear however that the then Ministry of Power did not originally follow due process in the procurement of the services of Ameri as per the 4 BOOT Agreement via single or sole sou cing It is nonetheless, a matter of notoriety that there was @ powor ctisis in the country during the period within which the Agreement was concluded. A decision to proceed under a single or Sole S0Urce procurement process would be justified under section 40(b) of the Procurement Act. Section 90 (3) of Act 663 as amended provides as follows: WWW.Starrfmonline.com “the Board shail, if satisfied that there has been a contravention of a provision of this Act or any other law in relation to procurement proceedings or procurement contracts, take action fo rectify the contravention which action shall include (2) Annulment of the procurement proceedings, (6) Cancellation of the procurement contract, (c) Ratification of anything done in relation to the proceedings; or (d) A declaration consistent with the relevant provisions of this Act.” The Ministry of Power subsequently obtained ratification for the procurement upon application to the Public Procurement Authority by a letter dated January 25, 2016. The otherwise invalid Agreement was rendered valid when it was ratified by the Board of the Public Procurement Authority. 3. Consequences of suspending payments In the absence of any default or breaches of any of the obligations on the part of Ameri as specified in the Agreement, GoG is obligated to make payments to Ameri on a monthly basis under section 10(a) of the Agreement. Non-fullillment of GoG's payments, therefore would entitle Ameri to draw down on the Stand-By Letter of Credit in the sum of Fifty-One Million United States Dollars (US$51, 000,000.00) per section 11(i). Section 10(a) of the Agreement provides as follows: "During the term, in consideration of the installation, operation and maintenance of the Ameri Energy Equipment and the provision of the Ameri Energy Services, the GoG Shall be obligaled to make payments lo Ameri Energy on a monthly basis as required BOOT Agreement via single or sole sou cing It is nonetheless, a matter of notoriety that there was @ powor ctisis in the country during the period within which the Agreement was concluded. A decision to proceed under a single or Sole S0Urce procurement process would be justified under section 40(b) of the Procurement Act. Section 90 (3) of Act 663 as amended provides as follows: WWW.Starrfmonline.com “the Board shail, if satisfied that there has been a contravention of a provision of this Act or any other law in relation to procurement proceedings or procurement contracts, take action fo rectify the contravention which action shall include (2) Annulment of the procurement proceedings, (6) Cancellation of the procurement contract, (c) Ratification of anything done in relation to the proceedings; or (d) A declaration consistent with the relevant provisions of this Act.” The Ministry of Power subsequently obtained ratification for the procurement upon application to the Public Procurement Authority by a letter dated January 25, 2016. The otherwise invalid Agreement was rendered valid when it was ratified by the Board of the Public Procurement Authority. 3. Consequences of suspending payments In the absence of any default or breaches of any of the obligations on the part of Ameri as specified in the Agreement, GoG is obligated to make payments to Ameri on a monthly basis under section 10(a) of the Agreement. Non-fullillment of GoG's payments, therefore would entitle Ameri to draw down on the Stand-By Letter of Credit in the sum of Fifty-One Million United States Dollars (US$51, 000,000.00) per section 11(i). Section 10(a) of the Agreement provides as follows: "During the term, in consideration of the installation, operation and maintenance of the Ameri Energy Equipment and the provision of the Ameri Energy Services, the GoG Shall be obligaled to make payments lo Ameri Energy on a monthly basis as required Z under the Agreement 4nd in aceontunce with te adjestinents ang other provisions of Aaney C to this Agreomenm* Section 114i) also provides as follows (it the GoG fats to full any of its payment abligations under this Agreement, AMERt ENERGY may, at ts option, draw down on the Leiter of Credit to satisty the GoG's Payment obligations in whole ar in part, and/or suspend performance of the AMER ENERGY Services..." WWW Starrfmonii ne.com Additionally, GoG would be in default under Section 23(a) (i) of the BOOT agreement if monthly payments to Ameri are Suspended. There are a number of remedies available to Ameri in the event that GoG defaults in its Payment obligations; a. Ameri may terminate the BOOT Agreement and GoG would have to return all of the Ameri equipment. b. GoG would also be liable to Ameri for damages based on early termination in an amount equal to the required payments for the remainder of the term under section 24(b)(ii)(B). ¢. Ameri may also initiate Arbitration Proceedings against GoG with its attendant high Cost, should negotiations fail, 4, Demands for Payment by Ameri This Office has received a copy of a letter dated 26 May 2017 from Kwame Akuffo & Co Unlimited for and on behalf of Ameri addressed to the Ministry of Energy. The letter questions the basis for the failure of GoG to pay to Ameri an overdue sum of Twenty-Seven Million, One Hundred and Sixty-One Thousand, Three Hundred and Fifteen United States Dollars (US$27, 161,315.00). Similar demands have been made by Ameri itself by letters dated June 14, 2017, June 15, 2017 and September 11, 2017 By its letters, Ameri acknowledges part payments received from GoG for non-queried invoices and threatens to ‘apply section 23(a)(i of the BOOT Agreement which provides for Default and Remedies : We are of the view {hat since G obliged to make full p Agreement, F OG does nat dispute the accuracy of the invoices, GoG is AYMeNt Of the invoices submitted in Accordance with the terms of the allure by GoG to make these payments would make G: henallies under the Agreement WWW.Starrfmonline.com ‘0G liable for the Appropriate 5. Recommendations Our review also took note of observations in a report of GoG's external solicitors, Addieshaw Goddard LLP, which we are in general agreement with in the following terms: a Admittedly the legal effect of the Stand-By Letter of Credit (SBLC) issued to Ameri is unfavourable to GoG and overly favourable to Ameri in that it gives Ameri the Opportunity to call on the full USD 51 million after collecting the required payments. under the BOOT Agreement, without having to give notice to the GoG, even when there is an invoice dispute between the parties, GoG’s legal position would have been better protected if it had Signed a Power Purchase Agreement (PPA), which would have enabled a proper risk allocation. b. GoG's main complaint stems from the financial aspect of the BOOT and related Agreements. Whereas the Deferred Payment Facility Agreement provides that the maximum total cost of the project over the five year term is approximately USD 360 million, the BOOT Agreement itself provides the cost of the Project will be a minimum of USD 510 million, a Significant difference of USD 150 million. GoG therefore maintains that it has overpaid for the BOOT Agreement project by over USD 150 million, Obviously, GoG entered into a very unfavourable agreement with Ameri. ¢ — Itis alleged that the BOOT Agreement is unconscionable. We are of the view that the notion of an unconscionable agreement against the interest of GoG is not maintainable for the following reasons: i. the Agreement was concluded between GoG, a State Party which is in a stronger bargaining position in all respects than Ameri, a private corporate body. t — Fron the doc Ail 10 Wis Oltice, the concluded on the b: BOOT Agreement was SIS of a Letter of Intent (LOL) from th (VRA) and the Ministry of Power for and on behalt of G Bo Responsible Officers of GoG exe: Ne Volta River Authority iG. ti culed the Agreoment amid calls by a OF the general public of the exorbitant cost Parliament, which subsequenlly granted the Agreement, found it necessary to conduct any due diligence that may have resulted in a better deal for Go. Norwegian newspaper and members ‘of the project, But neither GoG. nor approval for The complaint that the profit margin in favour of Ameri is objectionable has no grounding in the law since the parties freely bargained and concluded the Agreement through accredited representatives and or agents. < Neither is the notion that the Agreement ought to be nullified because Ameri did not contribute any money to the performance of the Agreement maintainable in iw. WWW.Starrfmonline.com For GoG to extricate itself from the highly unfavourable BOOT Agreement without paying damages and or penalties to Ameri, there is a need to demonstrate that the Agreement was procured by illegal means cither through fraud or corruption or in breach of the PPA: However, for GoG to make such claims it is imperative to gather sufficient relevant evidence to establish whether or not the BOOT Agreement is tainted by fraud or corruption. Should GoG decide to terminate the BOOT Agreement, there is the need to compare the market variables to enable GoG assess the damages that it would pay to Ameri in the event of such termination. To avoid creating a deficit in the supply of power in the event thal the BOOT Agreement is terminated, the Ministry of Energy may re-negotiate and re-activate some of the Power Purchase Agreements, which have been suspended by the Ministry of Energy to make up for any deficit that might occur with the termination of the Boot Agreement. Allematively, GoG may re-negotiate the BOOT Agreement with Ameri with the view to achieving more favourable terms. Whether the case should be adjudicated in Ghana or externally WWW.Starrfmonline.com Section 32(f) of the BOOT Agreement stipulates that all disputes arising out of this Agivement shall be settled, where possible, by negotiation between the parties. Whore negotiations fail, the dispute shall be seltled by arbitration in accordance with the UNCITRAL Arbitration Rules in effect on the date of the institution of arbitration by either Party. Any intended litigation in respect of the BOOT Agreement therefore would have to take place in London, England in accordance with the Agreement and not in Ghana or at any other venue. It is advised, however, that the governing law per section 32(e) of the Agreement are the Laws of Ghana to the exclusion of any provisions related to conflict of laws. You may please revert should you require any further clarification GLORIA AFUA AKUFFO (MISS) ATTORNEY-GENERAL & MINISTER FOR JUSTICE

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