General News of Tue, 28 Mar 201743

Ameri deal: $150m overpricing claim 'hatchet job' – Omane Boamah

The $510million power deal between AMERI Energy and the Government of Ghana (GoG) was “clean” and also helped to solve the prevailing power crisis (dumsor) at the time, former Communication Minister Dr Edward Omane Boamah has said, further refuting claims that it was overpriced by $150million.

In Dr Omane Boamah’s view, the overpricing allegation, which was “concocted” by the 17-member Philip Addison Committee set up by Energy Minister Boakye Agyarko to review the deal “cannot hold because plants are not sold at ex-factory prices. Moreover, in Ghana thermal plants are normally not procured directly from the manufacturers. Eg. KTPP, TT1PP, Tico etc.”

In a statement, he said the Government of Ghana “made no payments” to the Dubai-based energy company “prior to the procurement, installations and delivery of power.”

Apart from the overpricing allegation, the Addison report also said some aspects of the deal either did not get parliamentary approval or were injurious to the state, thus, needing renegotiating.

According to Dr Omane Boamah, however, “Per the agreement with AMERI, the Government of Ghana through the Volta River Authority (VRA) will only make payments to AMERI for power produced and supplied to the VRA just like any other Independent Power Producer (IPP).”

According to him, the VRA will pay through tariffs charged on the end consumer.

“Also, per the agreement, Government was required to provide a standby Letter of Credit (LC) for an amount of US$51 million, which LC has been raised,” Dr Omane Boamah pointed out.

In his view, the findings of the committee, “chaired by a known NPP fanatic” were not surprising since “it is well-known the NPP made it clear before the elections that they were determined to find faults with the AMERI deal at all cost.” “Hence one is not surprised by their conduct.”

In his judgment, the failure by the committee to contact or speak to any former Minister in the Mahama administration for “clarification” renders the report “one-sided.” “At least natural justice demands that!”

He has, therefore, urged Ghanaians to “reject” the “cooked” report, which in his view, is a “hatchet job initiated by Mr Boakye Agyarko.”

Below is the full statement from Dr Edward Omane Boamah:

AMERI AGREEMENT WAS CLEAN AND HELPED SOLVE DUMSOR -----------------------------------------------------------------

The agreement with AMERI is a Build, Own, Operate and Transfer (BOOT) agreement and not an outright purchase of generating plants by the government of Ghana.

Government of Ghana made no payments to AMERI prior to the Procurement, Installations and delivery of power by Ameri.

Per the agreement with AMERI, the Government of Ghana through the Volta River Authority (VRA) will only make payments to Ameri for power produced and supplied to the VRA just like any other Independent Power Producer (IPP).

Indeed VRA will pay through tariffs charged on the end consumer.

Also, per the agreement, Government was required to provide a standby Letter of Credit (LC) for an amount of US$51 million, which LC has been raised.

The committee set up by the Minister of Energy was chaired by a known NPP fanatic, Mr. Phillip Addison.

It is well-known the NPP made it clear before the elections that they were determined to find faults with the Ameri deal at all cost. Hence one is not surprised by their conduct.

The committee never contacted or spoke to any former minister or appointee of the NDC for clarification, thereby making the report one-sided. At least natural justice demands that!

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***When compared to seven (7) comparable plants in Ghana, the composite generation tariff for the AMERI project of about USc14.59kWh is lower than the average approved composite tariff for the seven plants at USc14.94kWh.

5years versus 20years compared (levelised) ........................................................................

***The levelised tariff for AMERI is the lowest (USc11.46kWh) compared to the tariffs for seven (7) comparable plants.

‘Levelised tariff’ is the approved tariff adjusted over the concession/contract period. In other words, when comparing the AMERI project (contract period of 5 years) to the other plants that have a concession or contract period of twenty (20) years, you either have to spread AMERI’s cost over a 20-year period.

Or, compact the other plants’ cost into a five-year period, to be able to make an acceptable comparison.

The 3 options: namely, Outright purchase, Rental and BOOT.

Nominal costs for the 3 options are US$438.9m, US$477.3m and US$516.3m respectively.

• GoG could not choose the option of outright purchase because we did not have the funds.

• For the rental option, it meant GoG will not own the plant.

• BOOT will result in GoG owning the plant at the end of five years. This would help develop the capacity of the country’s power generation company and increase the portfolio of generating plants in the country.

The thermal generation plants are not sold off the shelves and could take up to a lead time of 2 years to procure these plants. This certainly defeats the emergency solution for dumsor envisaged.

The Deputy Attorney general was part of the negotiation team and even witnessed the agreement so there was no need for another legal opinion.

Engineers and Planners was awarded a contract to prepare the site for the installation of the plants. GoG has paid E&P for all works undertaken to date by Engineers and Planners. It is therefore not true they have been paid for no work done.

Ameri has so far performed above the guaranteed performance at site conditions. The power outputs of the 10 units were between 26,322kW and 27,222kW, the net of which is higher than the Guaranteed Net Power Output of 256,347kW in the agreement.

The Ameri technology is well-proven with more than 1,800 units deployed worldwide and almost 69 million hours of operation. Its modular concept and factory-tested components allow for fast installation. This technology therefore lends itself to emergency applications.

AMERI has successfully provided the 250MW fast track power generation solution via the installation of ten (10) GE TM 2500 aero derivative gas turbines in Ghana (“the Project” or “the AMERI Project”) which has impacted positively on the generation capacity in the country.

The NPP and Philip Addison concocted 150 million dollar overpricing allegation cannot hold because plants are not sold at ex-factory prices, moreover in Ghana thermal plants are normally not procured directly from the manufacturers. Eg. KTPP, TT1PP, Tico etc.

Ameri took the decision to assume the risk by procuring, installing, operating and maintaining these plants with the hope of recovering their investment through tariffs over five years after which Ghana takes delivery and ownership of these plants. Government of Ghana took no such risk.

From the foregoing reject The NPP cooked Philip Addison Committee Report. It is a hatchet job initiated by Mr. Boakye Agyarko

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