BOST to sue American firm over US$109m contract

The Acting Managing Director of the Bulk Oil Storage and Transportation Company Limited (BOST), Kwame Awuah-Darko, has disclosed that the company is considering legal action against American Tank and Vessel Company for failing to honour its obligation in a US$109million contract signed in 2006.

According to Mr. Awuah-Darko, the American company was engaged by BOST to construct pipelines for transporting fuel between 2006 and 2008, but the company failed to honour its part of the agreement.

“BOST entered into a supplier’s agreement for the construction of certain tanks through Tema and Akosombo. The tank assets were built but there has never being any supply of the pipelines. I have personally been to the company’s yard and seen one pipeline, which is the 12-inch pipeline that has been constructed. The 8-inch ones have not been constructed either, and none of them have been supplied. These pipelines are supposed to carry petroleum from Tema to Akosombo, which is then going go up the river to Buikpe to support the northern sector, and to Bolga for export. The total contract sum is about a US$109million -- US$35million is for the tank farms and the remaining US$67million is for the pipelines. So the bulk of the contract has not been executed,” he explained.

Mr. Awuah-Darko told Parliament’s Accounts Committee Monday that all efforts to get the American firm to honour its part of the contract have proved futile.

He explained that by 2009 the whole contract had been paid for by BOST, and indicated that he personally went to sign the settlement’s agreement in 2015 -- which he claims they have not honoured.

“It is a very slippery company. We have involved the US Embassy, Ghana Embassy, lawyers. It is in black and white that the company has not been faithful to its suppliers’ agreement. If we are unable to use the last-minute diplomatic effort we have put in place, then we may have to as a country or company institute a legal action against it,” he added.

On whether due diligence was done before the contract was signed, Mr. Awuah Darko said: “The problem is that it is a contract that should have been structured as an Engineering Procurement and Construction Contract (EPC). Unfortunately, management of BOST at the time and government of Ghana did so under a supplier’s agreement. When you are building tanks or pipelines you don’t use a supplier’s arrangement. The existing arrangement has so many loopholes whereby they were able to draw down on the money without BOST having to sign that the work had been done”.

The American firm designs, builds and erects tanks and hydrocarbon terminals, and has over 30 years’ experience.

It was engaged in 2006 by BOST to construct pipelines to cart oil from Tema to two destinations, one of which is from Tema to Akosombo.