Balkan Energy Thrown Out
5/17/2012 2:30:32 PM -
The Supreme Court has ruled on the constitutional matter that arose out of a legal tussle between the government of Ghana and Balkan Energy Ghana (BEG) over a lease agreement on the Osagyefo Power Barge.
In a unanimous decision of a seven-member panel chaired by Justice William Atuguba, the court yesterday indicated that the Power Purchase Agreement (PPA) was null and void.
The state sued Balkan Energy Company LLC, Balkan Energy Ghana Limited and Philip David Elders at the Commercial Court, challenging the legitimacy of the Power Purchase Agreement that leased the Osagyefo Power Barge to Balkan Energy in 2007 to operate.
The state, led by the Attorney General, alleges that Balkan Energy Ghana Limited, owned 100 percent by Balkan Energy Company LLC, a company based in USA, in 2007 entered into a PPA with Government of Ghana for the Osagyefo Badge.
Justice Date-Bah, who read the ruling, explained that the PPA was an international transaction because of its features.
According to the ruling, since the agreement was an international one, it should be sent through Ghana's parliament for the necessary legalities.
The court further recommended in its ruling that parliament should set up a committee to look into Article 181 of the constitution and also enact a bill that could indicate what an international business transaction was.
However, although government was part of the deal, the agreement did not pass through parliament for approval.
So when the Mills administration came into office, it observed the anomaly and raised issues about it but the company took the government to an Arbitration Tribunal outside Ghana.
However, the Ghana party was of the opinion that since the PPA was an international transaction, the issue of Arbitration Tribunal was not needed.
The state therefore decided to drag Balkan Energy Ghana Limited, its mother company Balkan Energy Company and one Phillip David Elders to the High Court to seek certain reliefs.
At the court, the panel ruled that the case should be referred to the High Court but the High Court should base its final judgment on the Supreme Court's ruling.
The State Attorneys had previously claimed that the PPA transaction violated Article 181 of the constitution, which principally deals with parliamentary ratification of loan agreements.
Under the PPA, the 125-megawatts Osagyefo Barge was leased to Balkan Energy Ghana, wholly owned by Balkan Energy Company LLC, to repair, rehabilitate and commission it within 90 days of the effective date as defined in the agreement.
While Article 181(1-4) deals with parliamentary ratification of loan agreements, article 181(5) extends the requirement to 'international business transactions', to which the government is a party.
It states that: 'This article shall, with the necessary modifications by Parliament, apply to an international business or economic transaction to which the Government is a party as it applies to a loan'.
But the defendants had argued that the PPA was a valid contract between the government and a Ghanaian company. According to them, it was not an international business or economic transaction to which the government was a party and thus in need of parliamentary approval under Article 181(5) of the Constitution.
Ghana's Attorney General on the other hand disagreed, citing several factors which made the transaction an international business transaction.
According to the AG, the expression of interest in the commissioning of the Barge and the negotiations for the PPA were conducted entirely by Balkan Energy LLC, which entered into a memorandum of understanding for the project and undertook the execution of the project.
By Stella Danso Addai