This is Part III of a four part series that we ran last year on the downstream petroleum sector. This part deals with the ownership structure of the GNPC from its inception to when the regime of Jammeh was forced to buy-out Bazzi and partners. This involuntary - or more appropriately, forced divestiture - was made possible because of a little known clause, apparently buried in the agreement, that many government official said they were unaware of its existence, made it possible for the non-government shareholders to milk the alliance for 5 years before off-loading the liabilities of the GNPC to government.
We, at sidisanneh.blogspot.com, have been focusing more of our attention on the downstream activities that involves GNPC with little attention paid to the off-shore or upstream activities of Yaya Jammeh who was, without doubt, the dominant player and most consequential player in these activities that have resulted in arbitration, cancellation and reinstatement of contracts. There is no doubt that the entire set of agreements with African Petroleum Corporation and other foreign companies must be reviewed to ensure equity. Our next new blog post will be looking at these developments and how they will impact future petroleum exploration in The Gambia.
|Yaya Jammeh, Head of the cartel|
Social Security and Housing Finance (31%), Gambia Ports Authority (10%) and Gambia National Petroleum Company Ltd (7%) represent government share in the venture that totals 48%.
The private investors led by the Lebanese-Syrian, Mohammed Bazzi (30.8%) comprise of another Lebanese, Fadi Mezaggi (10.3%), a Gambian, Amadou Samba (9.9%) and Premier Investment Group (1%) which is jointly owned by Mr. Bazzi and Fadi Mezaggi. How the 1 per cent is shared among the two is unknown. The two, however, control 42.1% of the facility and with Amadou Samba's 9.9%, the private investors control the facility with 52% an with it the management and operations of the facility.
The Gam-Petroleum Storage Facility Company, as the company is officially known, had two other strategic entities who do not own shares in the company but are critical to the viability of the venture.
The two non-shareholding strategic partners were Total International and the National Water and Electricity Company (NAWEC) - the former serving as the international procurement arm and the latter as the single biggest consumer of heavy and light fuel oil and other petroleum products.
Total International is a French multinational energy company that enjoyed the exclusive right to procure petroleum and petroleum products on behalf of Gam-Petroleum Company and also for its own retailing purposes. NAWEC on the other hand is a public enterprise whose current liabilities as at 31st October 2014 stood at nearly D 5 billion, D 3 billion of which was outstanding heavy fuel bills owed to supplier.
The fact that the storage facility was used as a collateral without the knowledge of a certain segment of the government, came to light when another surprise was sprung on a regime that is either incompetent or corrupt or both. It was discovered that the private investors i.e. Messrs. Bazzi, Megazzi and Samba had supplied stock belonging to Total International to NAWEC without the knowledge of the owner.
The discovery was by Total International when it went to access its stock and it was empty who immediately invoked the collateral clause by demanding full and immediate payment of US $ 24.2 million, barring which investors will forfeit the facility. Under the agreement Total International will take possession and the subsequent selling of the facility, depriving all shareholders, including government of ownership.
During the negotiations, it was revealed that the US$ 24.2 million owed to Total International is inclusive of the US $ 64 million Mohammed Bazzi claimed NAWEC owed to the Euro Africa Group, a company owned by the same Mohammed Bazzi.
Part IV will look at the events following Total International's decision to invoke the collateral clause, matters relating to NAWEC debt settlement proposal and its implications on the future of the national electricity company.