Wereko-Brobby to face US court over $36m

Houston (United States) -- Houston registered company, Lushann, is poised to launch legal action by the end of this week in Texas against General Electric’s Energy Rentals division (GE) for allegedly going behind its back to secure a power deal with Ghana’s national generation utility Volta River Authority (VRA).

The fallout from the case could damage confidence among potential investors angling to plug the country’s energy gap, and hit several nascent gas-to-electricity projects along the West African littoral.

Lushann chief executive, Kwesi Sintim Aboagye, hopes to become an independent power producer after his company last weekend brought on stream the offshore Saltpond field. Sintim claimed that “at least” 40 billion cubic feet of associated gas from wells 3 and 4 will guarantee 50 megawatts for the national grid, with steam induction boosting the base load to 90 MW.

Lushann was alerted to the worsening energy crisis while negotiating a gas off-take and power purchase agreement with the Volta River Authority for Saltpond gas. The authority urged Sintim to consider emergency power solutions in the interim and, on the basis of the power purchase agreement signed on 8 February, Lushann signed a six-month memorandum of understanding with Delaware Company- GE Energy Rentals- for two TM2500 combined cycle gas turbines.

The deal was to be effective from 20 March to 15 April if neither terminated and if within that time Lushann arranged a downpayment to mobilise the equipment. Sintim said GE then initiated its own contacts with the VRA without informing Lushann, even before the initial period expired. He said this complicated his relationship with the company and prevented meetings with Nigerian investors.

Lushann’s power purchase agreement was said to be worth some $36 million and was touted as a local market entry point with potential earnings running into hundreds of millions of dollars in Ghana and the sub-region.

A notice of intent to sue was issued last week listing several causes of action, including tortuous interference with a contractual relationship, misappropriation of confidential and proprietary information and breach of both non-competition and non-circumvention agreements.

A senior GE executive said he was “not aware of any MOU between GE and Lushann.” However, the source nonetheless admitted that discussions between GE, VRA and another company, which has a power purchase agreement, are ongoing and “they are talking to us about our equipment.”

GE has enjoyed a long and independent relationship with both the Volta River Authority and state oil company Ghana National Petroleum Corporation (GNPC), the source said. The source added: “We’ve got a lot of trailer-based 20 MW turbines capable of being hooked up within two or three days and we’ve already got fast-track plants into Tanzania and Nigeria- and that’s the type of schedule we’re offering in Ghana and Cameroon.”

The chief executive of one local generating company said that the scramble for bankable power purchase agreements from fast-deregulating national utilities in West Africa was fraught with political pitfalls “and contract enforceability is going to remain a big issue.”

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