In June 2018, the Ghana National Gas Company (Ghana Gas) entered into an Engineering, Procurement, Construction and Commissioning (EPCC) Agreement for the construction of a 10km pipeline from GNGC TRMS to the Karpowership at Sekondi and other facilities. The project was estimated to cost US$ 26.5 million. As per the initial arrangements, approval was granted for Amandi Energy to pre-finance the project and pass on total costs including financing costs to Ghana Gas.

Amandi sort funding from CAL Bank Limited. Under the terms of the Funding Agreement between Amandi and Ghana Gas, Ghana Gas is expected to refinance the loan within 18 months of commencement of the project.

The following are the terms of the loan:

Loan Amount: US$ 26,500,000.00

Interest Rate: 11%

Fees & Charges

Arrangement Fees: 1%

Processing Fees: 1%

Per the Facility Agreement between Ghana Gas and Amandi, during the 18 months, Ghana Gas must pay all the applicable interest, charges, fees and commissions which the bank will charge. The 18 month period also serves as a moratorium on the principal.

To date, a total of US$ 2.4million has been paid under this arrangement as interest and fees. The breakdown is as follows;

Item	Description	Amount US$
1	Interest on Loan	1,720,019.41
2	Fees and Charges	701,745.25
	Total	2,421,764.66

It is expected that Ghana Gas will refinance the loan by March 2020, which is the same time for the moratorium to end. Should this happen, the Company will be expected to make an average monthly payment of about US$900,000 being accrued interest and principal. The agreed repayment source is from the proceeds from the transportation of Lean Gas to the Karpowership

To ensure the Company meets its loan obligations, all commercial arrangements between Ghana Gas and GNPC on the Karpowership must be firmed up to ensure that all receivables due Ghana Gas are appropriately documented and collected. Failure to do so may lead to the likelihood of the Company defaulting in the repayment of the loan.

Additionally, Ghana Gas can explore the option of suggesting that GNPC allows Karpowership to pay Ghana Gas directly for the transportation services offered or to ring-fence this Karpowership Transaction from other GNPC transactions so that GNPC can pay for the Karpower transportation tariff separately because of the loan.

TASK

a). In a Group of three (3) representing Independent Consultants, advise the Ministry of Finance, the Ghana National Gas Company and the Ghana National Petroleum Corporation on the most appropriate measures to be undertaken in resolving this financial hurdle and interplay of responsibilities. The report must include relevant references, data and figures that support all arguments.

b). In an Individual Powerpoint Document, students are expected to present a summarised report in the task a). above. Marks will be awarded individually in a face to face interaction/defence of all findings, suggestions and recommendations.

Further Guidance:

Advise the Ministry of Finance, the Ghana National Gas Company and the Ghana National Petroleum Corporation in a 3000-word Comprehensive Report on Methods of Financing and Management of Risk for Midstream and Downstream Petroleum Business Operations in Ghana.