A commercial court in Accra has dismissed an application for stay of execution by the International Finance Cooperation (IFC) and Organization of Petroleum Expecting Countries (OPEC) involving a Ghanaian company, Quantum Oil Terminals Limited.
The IFC was asking for a stay of execution on the matter in which Quantum Oil is asking for $41.3 million as damages to be heard in London. The court held that their argument did not hold.
Consequently, the president judges, His Lordship Justice Samuel Asiedu, awarded a cost of GH₵12,000 against IFC and OPEC Fund to be paid to Quantum Oil.
IFC argued that the governing loans agreement between the parties had an arbitration clause for all disputes and those of related agreements to be resolved at the London Court for International Arbitration.
Quantum Oil is seeking $41.3 million as damages, the local oil company indicates it was incorporated by The Quantum Group to construct a tank farm for the storage of petroleum products, which was to be leased to Eco Petroleum Limited to enable Eco Petroleum and its associated company and a bulk distributor for petroleum products to meet the directives of the industry regulator, the National Petroleum Authority (NPA) of Ghana.
It said the directive was part of the licensing requirements of the NPA issued to all bulk distribution companies to construct their own storage facilities before the set deadline to be able to hold licences to operate as such.
According to the suit, the directive obliged Quantum Oil to show evidence of its compliance immediately after the issuance of the directive and to complete construction of same within 2 years
It noted that Quantum Oil made substantial progress in the development of the facility; including among others, securing land, obtaining NPA permit for the construction, completing the engineering designs and obtaining environmental permit for the facility.
It said as of 2012, plaintiff had determined the total construction cost of the said tank farm as $30million of which it was to raise $9 million from its own resources and $21million from debt financing.
Quantum Oil said following substantial investments, it engaged a number of financial institutions, including Emerging Africa Infrastructural Fund and Fidelity Bank of Ghana in negotiations towards acquiring facility to speed up construction of the tank farm so as to meet the deadline set by the NPA.
In the midst of all these, it said Bulk Oil Storage Terminal (BOST) with which Quantum Oil had been storing its imported consignment had also served notice it would not store products belonging to third party companies which included Quantum Oil as from April 2014.
According to Quantum Oil, sometime in June 2012 IFC approached it in its offices and declared their intentions to finance the project.
The suit said the most significant and fundamental promise made by the two firms to Quantum Oil to attract the latter’s agreement to commence negotiations with the former was that it took no more than six months to commence and complete defendants’ procedures and processes to access their financing.
Quantum Oil averred that one of the other main attractions that the two firms eventually offered that it accepted to abandon dealings with the local financers was that while the cost of financing from local financers averaged 12% per annum, IFC made the representation that the cost of their financing was libor plus 6.5% which approximated to 7% in today’s market environment.
Following these promises, Quantum Oil said it truncated the previous discussions and initial agreements it had initiated with other international and local financiers so as to pursue this simpler alternative promised by the defendants.
Quantum Oil added that it firstly dealt with the IFC which later brought in the OPEC Fund to also negotiate same terms and conditions in a bid to syndicate the total facility required by the plaintiff.
Subsequently, Quantum Oil said it dealt with the two firms as one party-Financier though it executed separate facility agreements with the defendants.
According to Quantum Oil, in the initial discussions with the two firms, the amount required to complete the tank farm stood at $21 million.
It stated that IFC and OPEC Fund made their initial delay in approving funds which compelled plaintiff to arrange bridge financing from First Atlantic Bank in the sum of $5million.
According the complainant, immediately the two firms became aware of the bridge finance, they affirmed that they would limit their financing of the project to the sum of $11million.
However, Quantum Oil said following negotiations, $16 million was promised and IFC committed to disburse 50% and invited OPEC Fund to also commit to disburse the other 50%.
As a result, the two firms executed the facility agreement in 2015 but Quantum Oil said it suffered future repercussions from local and other international financiers with whom it was to negotiate for financing due to the unexpected conduct of the two defendants in abruptly breaching the agreement between the parties to finance the construction of tank farm.
It noted that despite promises to executive the deal within six months, Quantum Oil spent the whole of 2013, 2014 and 2015 repeating the provision of same documents and information it had provided to the defendants previously before the above execution.
Quantum Oil argued that delays resulted in missing deadlines of the NPA and BOST which attracted heavy penalties.
It said numerous delays and several other hiccups on the part of IFC and OPEC Fund resulted in huge damages hence the law suit.