DETAILS: How Freddie Blay nearly sold Ghana’s oil interest to South African company
The Board Chairman of the Ghana National Petroleum Corporation (GNPC), Freddie Blay, attempted to relinquish half of the country’s interest in one of Ghana’s oil blocks, the Deep Waters Tano (DWT), to a South African Company, Petroleum Oil and Gas Corporation (Petro SA), in violation of government directives.
Letters the Minister of Energy, Dr Mathew Opoku, wrote to President Nana Akufo-Addo accuse Mr Blay of pushing for Petro SA to buy half of the country’s oil interest which is currently in the hands of a GNPC-owned offshore company, Jubilee Oil Holdings Limited (JOHL).
“In one of the meetings in South Africa, it came to light that it is actually the Chairman of the GNPC who has been pushing for Petro SA to preempt the Ghana stake which is a posture that clearly undermines Government policy,” the minister said in a letter dated May 16, 2023.
The letter states that although the Board chairman has been directed in an earlier letter to stop all negotiations concerning the split of the JOHL stakes, he went ahead “proposing an equal split of the Deep Water Tano portion which would decrease the government’s interest.
”I wish to reiterate the directive in my letter of 28th October 2022 with reference SCR/KA.118/305/02 that; “the Corporation should cease any further negotiation with PetroSA on matters of PetroSA’s intended pre-emption of the JOHL stakes,” the minister’s letter pointed out an earlier notice to the board chairman.“
The energy minister explains that the JOHL stakes were acquired with state funds with approval from the president. And that per agreement, the parties involved in the contract have the right to be given priority or first choice when it comes to any direct or indirect transfer of one party’s ownership stake in the petroleum agreement.
Therefore, the decision to offload the 50% to Petro SA “must be served on the transferor” which GNPC is not, the minister said.
On October 13, 2021, Ghana through the GNPC acquired 7% stakes in Anadarko West Cape Three Points Company valued at a little over $164 million. GNPC vested this interest in JOHL which has been registered in Cayman Island, a tax haven, with the board Chairman, Mr Blay and GNPC’s Chief Executive, Ahweneeh Danquah, as its directors.
According to the correspondents, Dr. Opoku Prempeh had written to Petro SA to turn down the South African company’s interest in the deal.
When he attended the Africa Energy Week in Cape Town, in October 2022, the minister said he engaged his South African counterpart, Samson Gwede Mantashe, on the sideline of the conference and told him that “Ghana would not approve any pre-emption of the JOHL stakes.”
“Subsequent to the meeting with my counterpart, Hon. Gwede Mantasha, Minister of Mineral Resources and Energy in South Africa, on the above subject, I have had cause to formally respond to him in two successive correspondences affirming Government’s position on the matter and you were in copy in all instances”, Dr. Opoku Prempeh said in a letter to Mr Blay.
But Mr Blay did not budge.
The energy minister stated his disappointment with Mr. Blay’s decision to go ahead with the preemption despite the government’s opposition.
“It is, therefore, scandalous that, in spite of these directives, you have led GNPC to offer part of the Government acquired JOHL interest in the DWT to PetroSA. I direct that you cease and desist from any further flouting of the directives forthwith and withdraw the offer made to PetroSA in your letter of 23rd April 2023 immediately.”
In his letter to the President, Dr Opoku Prempeh observed that all along Mr Blay knew that the ministry would need to approve of the deal because he (Mr Blay) had requested that the South African company seeks written consent from the minister of Energy as per Article 25 of the DWT Petroleum Agreement.
“Obviously, the Chairman is asking PetroSA to test the resolve of the Ministry in its express notification to PetroSA that such a request for consent will not be entertained nor granted if sought,” Dr Prempeh said.
The DWT Petroleum agreement states that:
“This agreement shall not be assigned by any or all of the companies comprising contractor directly or indirectly, in whole or in part without the prior written consent of GNPC and the Minister, which consent shall not be unreasonably withheld or delayed.”
He also averred the president’s mind to the repercussions Mr Blay’s action would cause had the deal gone through.
“Mr President will note that beyond these points earlier, a transaction that purportedly seeks to offload about 50% of the DWT stake that GNPC already owns, can be considered as a divestment of beneficial interest of the State. This would require more than a mere consent of the Minister. If His Excellency agrees to this divestment, not only would the [Petroleum Agreement]PA) apply, but also the process outlined in the Public Financial Management Law, the [State Interests and Governance Authority] SIGA) Law and potentially an approval of Parliament may be required. One can imagine the uproar that this process will cause in the media.”
As if to draw the president’s attention to a potential international trade disaster, he said GNPC and the Ministry of Finance (MOF) had started a series of discussions with one of the world’s major traders of crude oil and refined petroleum products, LITASCO SA, a Swiss Limited international marketing and trading company, operating refineries and retail network in Europe.
The end game is for the government to ride on the JOHL stake to refinance all outstanding debt GNPC owes LITASCO while the Swiss company supports other GNPC transactions leveraging the JOHL stake.
“The Chairman is aware of the series of letters that were sent to the South African Government through the Minister of Mineral Resources and Energy including a meeting in South Africa with PetroSA in attendance, the communication has been very clear that even though PetroSA could exercise rights under the JOA [Joint Operating Agreement], any such action would not be approved by the Government of Ghana.”
While Mr Blay and the Energy Minister tango over the deal, the Board Chairman of PetroSA, Nkululeko Poya, in a letter to the GNPC board chairman stated thought the deal had been clinched.
“PetroSA is ecstatic that both parties have been able to come to an equitable and cordial remedy to the matter of JOHL’s acquisition of DWT interest arising as a consequence of Anadarko’s disposal of their interests in Ghana, through a fifty-fifty (50/50) split of the DWT interest held by JOHL.
“PetroSA, by extension PetroSA Ghana Ltd acknowledges and agrees that as part of the completion for this transaction, it will issue GNPC with a formal notice of relinquishment of its rights to the remaining DWT interests held by JOHL. We will formally approach your Honourable Minister for his consent to the assignment of the interest in question, to PetroSA Ghana Ltd,” he said in a letter dated May 7, 2023.
He, however, asked for a speedy process to complete the transaction given the spell of delay that had characterised it.
“We note your long stop period in which to complete the transaction, subject to unforeseen or unexpected delays regarding regulatory approvals and its representatives on the matter. Whilst we accept this condition, it is anticipated that both parties will expedite on their parts to ensure that the transaction is concluded in acceptable timeframe to allow for both parties to explore the associated benefits of the transaction.”
Reaction of CSOs
Meanwhile, the Alliance of Civil Society Organisations working on Extractives, Anti-Corruption, and Good Governance is demanding the immediate removal of the two men leading the agreement—Opoku Ahweneeh Danquah, the CEO of GNPC and the corporation’s board chairman, Freddie Blay.
The group is made up of think tanks, including Africa Centre for Energy Policy(ACEP), Integrated Social Development Centre(ISODEC), the Centre for Democratic Development( CDD), the Centre for Extractives and Development Africa( CEDA), and the Public Interest and Accountability Committee, an organisation which audits Ghana’s oil expenditure.
The group, led by Abdul Karim Issifu, is making these demands because it believes that the actions of these two persons have made them a threat to Ghana’s interest in the petroleum sector.
According to the CSOs, a recent PIAC report revealed that in 2022 alone, JOHL raked in $290 million in interest.
“Despite the revenue potential of this interest to the state, GNPC has initiated steps to sell 50% of JOHL of the national asset held in the Cayman Islands to PetroSA in a bizarre circumstance years after Anadarko sold the asset to GNPC,” he said while addressing a press conference in Accra on Tuesday.
Mr. Issifu said, “Given that $290 million has already accrued to JOHL, the purchase of 50% imply that PETROSA would receive a percentage of the accrued benefits net of the purchase price and other costs and meaning that PETROSA may not have to pay anything for the interest.”
The group is also accusing the two people, Mr Blay and Mr, Danquah, who are alleged to be the only two directors of JOHL for keeping the offshore company, JOHL’s dealings in secrecy.
“We are concerned that the two directors of JOHL have supervised the secrecy around the company and have made no attempt to account for its revenues and expenditures. They have shown no interest and have woefully failed to operationalise any corporate governance structures, including appointing a Managing Director of a functional board for JOHL,” he explained.
According to the coalition, the transaction with PetroSA poses a significant danger to Ghana’s interest in the DWT.
They say the claims about the deal are illegal and accused those who are insisting on offloading 50% stake of having interests that are “variance with that of the state.”
While commending the minister for truncating the deal, they also want an immediate withdrawal of its hideous Cayman Island registration and the immediate termination of the PetroSA transaction.
Additionally, the 33 CSOs are demanding the immediate transfer of JOHL and its assets from Cayman Island and other jurisdictions to GNPC.
No response from Blay
The Fourth Estate calls to the GNPC Board Chair, Freddie Blay, to respond to the allegations against him were not answered. Mr. Blay did not also respond to a whatsapp message sent to him.
I can be fired but I’ve done nothing wrong to resign as GNPC Board Chairman – Freddie Blay
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