Osagyefo Power Barge: GNPC, Misak to decide on revenue sharing model
The Ghana National Petroleum Corporation (GNPC) and private firm Misak Limited are expected to deliberate to explore ways of sharing revenue that was accrued from the sale of the scrap material on the Osagyefo power barge, a Deputy Minister of Energy, William Owuraku Aidoo has told parliament.
“GNPC through its legal team is pursuing the company to come forward, sit down to review the reconciliation towards sharing the revenue that was accrued as a result of the sale of the scrap material.”
The power barge, with a capacity of 125 megawatts, was originally procured by the Jerry Rawlings government in 1999 from Italy at a cost of $110 million under an arrangement with Balkan Energy.
In 2015, the Ministry of Energy directed the Ghana National Petroleum Corporation (GNPC) to take over ownership of the barge.
However, due to a prolonged legal dispute, the GNPC was unable to carry out any maintenance activities on the barge, leading to its deterioration from excessive corrosion.
Appearing before parliament on Friday to answer a question posed by the MP for Jomoro, [Dorcas Toffey] on what the current state of the Osagyefo power barge at Effasu in the Jomoro Constituency is especially in terms of its ownership and condition.
Mr. Owuraku Aidoo indicated that the Ministry of Energy would engage GNPC to follow through the tenets of the Public Procurement Authority guidelines as well hold discussions with Misak Limited to formalize an agreement to share the revenue accrued from the sale of the scrap material.
Aidoo also explained that the power barge project was initially under the management of Western Power, a subsidiary of GNPC. Responsibility was transferred to the Volta River Authority in 2003.
However, in July 2007, the government of Ghana entered an unsolicited 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.
He said Ghana sought additional electricity supplies from the barge to alleviate electricity shortages resulting from reduced water levels at the Akosombo Dam hydroelectric project.
He stated that the Balkan Energy company promised to begin operations within 90 days and plans were announced to increase the barge’s generating capacity by 60 MW, bringing it from its current capacity of 125 MW up to 185 MW.
However, the barge never operated, and the expansion was not completed, he noted.
The Deputy Energy Minister revealed that government of Ghana sued in Ghanaian court, seeking to nullify the contract with Balkan Energy. Balkan Energy blamed ProEnergy, a U.S.company with which it had contracted, for Balkan’s inability to bring the generating station online when promised.
Further, Balkan Energy and ProEnergy sued each other in U.S. courts, and the government of Ghana later filed a lawsuit against ProEnergy in U.S. court.
On possession of the barge,the deputy minister said due to the prolonged legal dispute, which prevented GNPC from working on the barge, no maintenance activities could be performed throughout the arbitration, leading to the deterioration from excessive corrosion.
Regarding the third-party assessment of the barge, Mr.Aidoo said in a report dated 10th June 2019, the United States Agency for International Development (“USAID”), under its Integrated Resource and Resilience Planning Project, provided an analysis of the status of the Osagyefo Power Barge (OPB).
He said after performing a technical audit on the barge, USAID, in its report, recommended that it was not commercially viable to return the OPB to service as the cost of refurbishment would likely far exceed the cost of purchasing a new barge.
Concerning the process for disposal of the barge, he said GNPC received a proposal through the Ministry of Energy from Sarfo and Stephen Company, dated 2nd March 2021. GNPC subsequently received an Expression of Interest to decommission the barge through the Ministry of Energy from Misak Limited, dated 2nd March 2022.
“In this letter, the Minister directed GNPC to engage Misak Company Limited to decommission the barge and informed GNPC that Misak proposed to give 60% of the revenue from the sale of the scrap to GNPC and retain 40%.
Upon receipt of these letters, GNPC visited the barge site, immediate communities, and key government agencies, including the Municipal Chief Executive (MCE) and the Police, on 7thApril 2022 to ascertain the condition of the barge.” he said.
Also, he said from the interaction with the community, Chiefs, MCE, and police, it was discovered that Misak had already commenced the removal of some parts of the barge and other metals without proper recourse.
The team, he said therefore, engaged the MCE and police and requested that further dismantling of part of the barge should be prevented until a disposal process is concluded in line with Public Procurement Authority guidelines for the disposal of goods.
GNPC subsequently wrote to the Ministry in May 2022 to inform that immediate steps would be taken to decommission the Osagyefo Barge in accordance with Sections 83 and 84 “Disposal of Stores, Vehicles, Plant and Equipment” of The Public Procurement Act, Act 663 as Amended (Act 914).
In line with the Public Procurement Authority guidelines as mentioned above, GNPC constituted a Board of Survey to physically inspect the barge and recommend the best disposal option.
He said on 9th February 2023, the Board of Survey team visited the barge site and provided a status update in a report dated 28th March 2023.
The team observed that about ninety percent (90%) of the OPB was dismantled.
Mr.Aidoo said through interaction with the local community, it is believed that Misak Limited carried out the dismantling of the barge without engaging GNPC to formalize an agreement as directed by the Minister of Energy.
The MP for the constituency, Dorcas Affo-Toffey, which the barge was situated called for legal action to be taken against Misak Limited.
“I asked a question to ascertain the status of the power barge and the Minister confirmed that a private company with the name Misak, without proper authorisation and due processes, has significantly dismantled the power barge and sold off the component. What surprises me the most is that there has not been any legal action taken against the company that did this illegal act but rather, the government is seeking to share the proceeds from the sale of the power barge with the company.”
She also demanded for a full-scale audit into the disposal of the badge and transparency in the sale of the barge.
