APSL drags Ghana to International arbitration: Demands $3.6b damages

Ashanti Ports Services Limited (APSL) has dragged the Ministry of Transport (MOT), represented by the Ghana Shippers’ Authority (GSA) to the United Nations (UN) Commission on International Trade Law for arbitration over a Concession Agreement on the development of the Boankra Integrated Logistics Terminal (BILT) Project.

The agreement, on a Build, Operate, and Transfer (BOT) basis was unitarily terminated by the Ministry for alleged failures to achieve financial close within the Cure Period among other breaches.

According to APSL, the termination has led to the unlawful takeover of the BILT Project by the Ministry thus preventing it from executing its role as Concessionaire.

APSL is seeking reliefs including an interim injunction to restrain further works on the BILT Project site, a claim for $16.3 million in expenses incurred, with interest; a refund of $16 million paid to Justmoh Construction Limited by the Ghana Ports and Harbours Authority (GPHA) for a 39% share acquisition in APSL; a refund of $49 million, representing 39% of their share value sold to GPHA; and a demand for payment of the projected income of $3.68 billion for the BILT operations.

In the Arbitration Notice, APSL indicated that the Ministry of Transport, which is the Respondent, through the Ghana Shippers’ Authority (GSA), awarded the concession rights for the Boankra Integrated Logistics Terminal (BILT) Project to Afum Quality Limited (AQL) on a Build Operate and Transfer (BOT) basis.

The concession agreement, which was finalized on September 25, 2020, stipulates that AQL will manage the BILT Project for of 30 years. The initial three years will be dedicated to the construction phase, followed by 27 years of operational management. The project’s profitability is projected to reach US$3,683,720,785 over its operational lifespan.

Ashanti Port Services Limited (APSL) was therefore formed as the Special Purpose Vehicle (SPV) to represent one of the consortium members of AQL and is to provide both technical expertise and financial support for the successful execution of the BILT Project.

The BILT Project is of strategic importance, aiming to create a vital infrastructure link between Ghana’s ports of Tema and Takoradi and the interior regions of the country and also enhance connectivity to the landlocked nations of Burkina Faso, Mali, and Niger, thereby bolstering regional trade and economic integration.

This ambitious project falls under the category of natural resource use by the state and was, therefore, duly approved and ratified by the Parliament.

According to APSL, following the signing of the Concession Agreement on 25th September 2020 the Ministry compelled it to organize a sod-cutting ceremony at substantial expense before fulfilling necessary preconditions.

It indicated that the Ministry directed the Ghana Ports and Harbours Authority (GPHA) to acquire 39% of APSL’s shares for $49 million. The proceeds, which were intended for reinvestment in the BILT Project, were, however, mismanaged by the Respondent, leading to bad faith actions.

According to the Notice of Arbitration, the Respondent directed APSL to assign technical and engineering designs to an Independent Consultant, Vision Consult, thus creating conflicts and uncertainties.

Payments, it said, were made to contractors without APSL’s consent, deviating from proper procedures.

The contractor, Justmoh Construction Limited, was also directed to conduct extensive earthworks at the site without APSL’s approval, leading to unauthorized expenditures and significant financial discrepancies.

The Claimant indicated that the Independent Consultant’s estimate for the earthworks far exceeded initial projections, inflating project costs and impacting the financial model and profitability of the BILT Project.

According to the Notice, despite APSL’s efforts and securing substantial financing commitments, the Respondent prematurely terminated the agreement, citing failure to achieve Financial Close, a situation exacerbated by the Ministry’s interferences.

APSL explained that mediation efforts failed due to a conflict of interest, as Vision Consult, involved in the dispute, was appointed as mediator and a lack of timely responses and ineffective mediation led APSL to pursue arbitration.

The Claimant indicated during mediation that the Respondent and its associates continued work on the BILT Project, circumventing APSL’s consent.

GSA, Justmoh Construction Limited, and GPHA, it said, also unlawfully prevented APSL from performing its role, taking control of the BILT Project without legal authority.

APSL claims that GSA’s unilateral termination of the contract was unlawful and that the Respondent’s actions through GSA amounted to material breaches that unjustly led to the termination. APSL asserts that these breaches erroneously portrayed the Claimant as having failed to meet the financial close.

APSL is also seeking a declaration that GSA’s termination of the contract was unlawful, recognition that GSA’s interferences were significant breaches that contributed to the wrongful termination, an interim injunction to halt any ongoing works at the BILT Project site pending the arbitration’s outcome and general damages for the breach of the Concession Agreement and a declaration to restore the Concession Agreement in their favour.

Source: Mypublisher24