General News Thu, 31 May 2001

Energy Minister defends Sahara contract

The Minister for Energy, Albert Kan-Dapaah Wednesday defended government's decision to award the contract of lifting crude oil to Ghana to Sahara Energy Resource Limited of Nigeria without competitive tender saying the deal would save the country $7.4 million a year.

The government had come under intense criticism from both the Minority NDC members of Parliament and some members of the public for awarding the contract to Sahara without going through the normal process of competitive tender. "We did not have the benefit of time to consider competitive tendering", Kan-Dapaah told Parliament when he appeared before it to answer an urgent question on the award of the contract.

He said although the contract did not go through tender, the government is confident it did the right thing under the circumstances, adding, "everything about the contract is transparent and is in line with government's policy of zero-tolerance for corruption."

Suspicions have been raised about the award of the contract. President Kufuor might have increased those suspicions when he told a press conference that he was not interested in who lifts the crude oil to the country but only wanted to be sure that the country is provided with oil.


The Minister told Parliament that Sahara was selected because apart from his personal satisfaction with their track record, Sahara also possessed the ability to undertake the assignment and it was clear from initial discussions that their management fees would be lower than that of VITOL, the company contracted by the previous government to do the lifting.

Under the terms of agreement signed between Sahara and Tema Oil Refinery (TOR), was a management fee of $0.265 per each barrel of oil lifted which the Minister said would translate to about $7.4 million saving for the country per year.

Also under the agreement, "where TOR is unable or unwilling to receive the crude oil due to the refinery's shutdown as a result of scheduled maintenance or other site works, Sahara upon approval from TOR will undertake on behalf of TOR in the international oil market to swap the crude oil cargoes. The Minister justified the award of the contract to the company saying it is the best the country could have. He however wondered why Ghana was paying as much as 95 cents on a barrel of oil as management under the previous regime when the country had several options to reduce the fee.

At the moment, Ghana pays 26 cents per barrel as management fee to Sahara.

Source: NCS