3 MPs SUE GNPC OVER $700m LOAN

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Friday, November 28, 2014

Three New Patriotic Party (NPP) MPs have sued the Ghana National Petroleum Corporation (GNPC) for seeking a foreign loan without parliamentary approval.

The three, Dr. Anthony Akoto Osei, Dr. Mathew Opoku Prempeh and Samuel Atta Akyea MPs for Tafo Pankrono, Manhyia South and Abuakwa South constituencies respectively want an Accra Commercial Court to stop the GNPC headed by Alex Mould from acquiring a $700 million facility from a foreign bank.

Reliefs

The writ, filed the Faibille & Faibille, lawyers of the MPs yesterday want the court to declare that the GNPC “contracting, procuring, securing or otherwise acquiring or drawing down on the Loan Facility or any other loan without prior approval of Parliament is unconstitutional, unlawful, null and void.”

They also want a declaration that “defendant’s decision to undertake a programme of projects without parliamentary approval is ultra vires the Petroleum Revenue Management Act 2011 (Act 815) and is therefore null and void.”

Furthermore, the plaintiffs want a perpetual injunction restraining the GNPC and its agents “from contracting, securing, procuring or drawing down on a loan facility of $700 million or any other loan from any financial institution whether situate in Ghana or not or embarking on any project, works and programmes without prior parliamentary scrutiny and approval,” as well as any order the court will deem fit.

Statement of claim

In their statement of claim, the MPs averred that they got to know about the GNPC’s intention to secure a loan on November 10, 2014 when  Statesman Newspaper reported that the defendant was set to contract a loan of $1.200 million to be repaid in five years and secured by oil belonging to the people of Ghana.

According to the MPs, myjoyonline.com the following day published the GNPC’s reaction to the media stories in respect of the alleged speculated loan facility.

The plaintiffs said the GNPC confirmed in the statement to the media that it was indeed acquiring a $700 million facility at an interest rate calculated per three month LIBOR plus 3.9% for a five-year term.

“Plaintiffs say that defendant is to execute the Loan Facility agreement on or about November 20, 2014 with the draw-down of $350 million of the Loan Facility on November 25, 2014.”

Terms of loan facility

According to the MPs the GNPC said it was going to use proceeds of the loan facility to among other things augment its working capital, including oil and gas trading working capital needs and build up capital since state capitalization for its operations ends 15 years from the commencement of Petroleum Revenue Management Act in 2011.

They corporation the plaintiff said will also use the proceeds to ensure lower gas price to Ghanaian consumers and for cheaper electricity as well as secure a low interest facility at 4.43% for a 5 year tenure.”

The plaintiffs said the GNPC had said that the facility was “better than the 22% interest which the state would pay on the Offshore Cape Three Points (OCTP) project ($493 million) or the 15% interest which the state will pay on the TEN Field Gas project ($36 million) if the investors were to pre-finance the projects.”

Additionally the plaintiffs averred that according to the Defendant, the facility is expected to provide guarantees for the OCTP contractors for the off-take of natural gas from the field, raise a bank guarantee of about $200 to US$300 million.

Contention

The MPs say they will contend that “the projects have not been approved by Parliament as part of Defendant’s annual program of works in the manner stated and contemplated by Respondent in the myjoyonline interview which approval is a statutory requirement pursuant to Section 7 (3)(b) of the Petroleum Revenue Management Act (Act 815) (hereinafter, “Act 815”).”

“Plaintiffs will further contend that defendant cannot spend or borrow to spend on projects outside of its approved program of works,” adding they will also contend that “defendant purporting to engage in unapproved projects would constitute an illegality and unlawful conduct.”

Parliamentary approval

The plaintiffs insisted that GNPC is not authorized by law to spend or borrow to spend without parliamentary approval of the projects adding “plaintiffs say that although defendant intends to draw-down on the Loan Facility on or about November 25, 2014, the relevant agreement in connection therewith has neither been scrutinized by Parliament nor same approved by Parliament in accordance with Article 181 (3) and 181(4) of the Constitution, Section 7 of the Loans Act 1970 (Act 335) and Section 7(3)(b) of Act 815.”

The MPs said statements in the GNPC’s agreement showed clearly that the corporation “is merely acting as a vehicle for government to acquire loans without parliamentary approval.”

“Plaintiffs say that Defendant is a statutory corporation entirely capitalized by the Republic, its funds are public funds within the meaning and intendment of Article 175 of the Constitution of Ghana and cannot enter into loan agreements or contract the Loan Facility without the knowledge and consent of Parliament.”

The MPs said GNPC was established by an Act of Parliament, its budget, including administrative expenses and programmes are approved by Parliament and its funding is restricted by an Act of Parliament out of discrete funds owned by the Republic exclusively.