The Institute for Energy Security (IES) has welcomed the renegotiated and enhanced terms of the controversial $150 million Build, Operate, Own and Transfer (B…

The Institute for Energy Security (IES) has welcomed the renegotiated and enhanced terms of the controversial $150 million Build, Operate, Own and Transfer (B.O.O.T) deal between the government of Ghana, and Africa and Middle East Resources Investment Group Llc (Ameri Energy), which was submitted to parliament by Energy Minister John Peter Amewu.

Former Energy Minister Boakye Agyarko was dismissed in connection with the Ameri deal signed by the John Mahama administration.

Mr Agyarko came under heavy criticism when he claimed that Ghana will gain $405 million from the new power deal with Ameri Energy but it was discovered that the country will rather lose up to $472 million.

Subsequently, he was sacked by President Nana Akufo-Addo and replaced by Mr Amewu.

Mr Amewu was in Parliament on Wednesday, 6 December 2018 to personally lay the renegotiated deal.

Commenting on the development in a press statement issued on Tuesday, 11 December 2018, Executive Director of IES, Paa Kwasi Anamua Sakyi, stated that they have taken cognisance of the procurement and installation of 10 new GE TM 2500 aero derivative Gas Turbines and all related equipment, including the provision of certain services related to the operation and maintenance of the plant by Ameri for 5 years to provide a guaranteed output of 230MW; with the cost of each of the 10 units of the plant pegged at $850,000 per month, totaling $510 million for a 5 year period.

“IES finds the ‘Addendum 2’ to the original Ameri Agreement presented jointly by the Ministers of Finance and Energy to the Joint Committees of Finance and Mines and Energy of the Parliament of Ghana as cautiously satisfactory, value for money-driven and an improvement upon the Novated Amended Agreement which we considered a rip-off in July 2018. The expected gains are the results of the due process followed, the right engagements, and the favourable conditions used as leverage to negotiate with Ameri for waivers and discounts,” Mr Sakyi said.

“While the IES is convinced beyond any doubt that there is an element of cost saving in the Amewu-led Agreement compared to Agyarko’s, it is the institute’s considered opinion that the conditional reduction of $2,837,500 in the breakdown of the deferred payment is unlikely to hold, until Government takes steps to meet the prompt payment condition in the agreement,” IES added.

Below is the full statement:

IES’ TAKE ON RENEGOTIATED AND ENHANCED TERMS ON AMERI DEAL

1. The Institute for Energy Security (IES) has taken due cognizance of the Re-negotiated and Enhanced Terms (Addendum 2) of the original Build, Own, Operate and Transfer (BOOT) agreement between the Africa and Middle East Resources Investment (Ameri) Group and the Government of Ghana (GOG) on the procurement and installation of 10 new GE TM 2500 aero derivative Gas Turbines and all related equipment, including the provision of certain services related to the operation and maintenance of the Plant for 5 years to provide a guaranteed output of 230MW; with the cost of each of the 10 units of the Plant pegged at $850,000 per month, totaling $510 million for a 5 year period.

2. IES finds the “Addendum 2” to the original AMERI Agreement presented jointly by the Ministers of Finance and Energy to the Joint Committees of Finance and Mines and Energy of the Parliament of Ghana as cautiously satisfactory, value for money-driven and an improvement upon the Novated Amended Agreement which we considered a rip-off in July 2018. The expected gains are the results of the due process followed, the right engagements, and the favourable conditions used as leverage to negotiate with Ameri for waivers and discounts.

3. IES has also noted that government, following various calls has abandoned entirely the idea of the novation of Mytilineous International Trading Company into the review of the existing agreement. It has also not skipped our attention that this time, cabinet approval (reference OPCA 3/3/301118) and the legal opinion of the Attorney General’s office (reference D57/SF.8) have been secured for the “Addendum 2” which were all lacking in the Novated Amended Agreement Ayarko-led team attempted to “sneak” into Parliament in July 2018 for approval.

4. It is refreshing to note that Ameri has agreed to have interests accumulated on the $90m outstanding debt from February 2017 through to July 2018 waived, while an agreement has been reached with Ameri on a payment schedule for the $90 million, given government’s liquidity challenges in the Power sector.

5. With Ameri agreeing to charge $6.37 million per month instead of the $8.5 million per month in the existing “BOOT Agreement” for the remaining $255 million covering the last two and a half years of the BOOT Agreement, leading to a haircut of $63.75 million which will be paid over an extended year to the existing BOOT Agreement at an unconditional discount of $7 million, spread over a 12 month period, and further discounted by 5% on condition of prompt payment by Government of Ghana.

6. IES notes the full waiver of the remaining two and a half year’s $0.005kWh Variable Charge due Ameri, saving GOG an amount of $41.5 million ― $8.3 million for 2018, and $16.6 million each for 2019 and 2020.

7. Aside the timely payments of invoices, timely confirmation of Letters of Credit (LC), IES has further taken note that GOG shall immediately facilitate the outstanding Tax exemptions by the Parliament of Ghana.

8. While the IES is convinced beyond any doubt that there is an element of cost saving in the Amewu-led Agreement compared to Agyarko’s, it is the institute’s considered opinion that the conditional reduction of $2,837,500 in the breakdown of the deferred payment is unlikely to hold, until Government takes steps to meet the prompt payment condition in the agreement.

Signed: 
Paa Kwasi Anamua Sakyi (Executive Director, IES)

Source: Ghana/ClassFMonline.com/91.3FM

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