Experts ask gov’t to uphold sanctity of energy contracts

There is a certain mistrust that characterises NDC-NPP politics in Ghana and which is making the country look, increasingly, like it does not uphold the sanctity of contracts; and experts warn this could give investors the wrong impression.

While contract cancellations have led to judgement debts in the past, with the state losing a lot of money, there is a counter-argument that a new government simply cannot look away when it discovers its predecessor government got contracts wrong.

The NPP government has, for example, said the Ameri Power deal signed under the Mahama administration was over-priced by about US$150million, and is seeking to review it.

The B&FT understands, also, that the US$7billion Sankofa gas deal with Italy’s ENI could be in for review, since the NPP – even while in opposition – made it clear it was against the US$9.8/MMBtu negotiated price.

The Ghana Gas Forum, organised by the Ghana Gas Consortium between November 7 and 8 in Accra, debated the issue of sanctity of contracts at length – with a number of experts arguing it would be very costly for Ghana if it gives investors in the Oil and Gas sector the impression that it does not uphold the sanctity of contracts.

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Leading the discussion on the issue was former Trinidadian Energy and Finance Minister Conrad Enill, who asked Ghana’s political leaders to “take energy out of the political equation” and work out a mechanism by which contracts would not suffer when political power changes hands.

“Find a way to take energy out of it, because people are going to suffer if you don’t,” he said.

Conrad Enill, whose presentation focused on how to achieve good leadership and global competitiveness in the gas sector, suggested a standing energy committee at cabinet level – as is the case in his country – considering how important energy is to economic transformation.

Other contributors to the discussion agreed with him on the need for the sanctity of contracts to be upheld, with Dr. Cassandra Martinez-King, a Petroleum Law expert, highlighting the need for “skilled negotiators” to reduce the incidence of contract cancellations.

The sanctity of contracts, she said, is fundamental to the industry, and does have a great effect on investors coming into a country.

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