Sunday, July 3, 2016

State-sponsored corruption at the Gambia National Petroleum Corporation - Part III

Yaya Jammeh, Head of the cartel 
The one-of-a-kind 51,000 metric-ton petroleum storage facility built in 2008 at a cost of $ 50 million and located at Mandinari village was jointly owned by a consortium of public enterprise and private individual investors until it was 'nationalized' last year.

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.
A separate storage agreement was entered into between Gam-Petroleum and Total International, the details of which are not known in full.  According to official documents government - at least, one or more key ministries - was unaware that the storage facility was used as collateral with obviously the full knowledge and approval of the majority shareholders and Total International.

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.
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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.