An AMERI rock for NDC?
Following my article here last week on the transfer of ownership of the AMERI plant to the government of Ghana, a good friend of mine who is an avid National Democratic Congress (NDC) supporter called me.
He seemed rather excited. His point? That former President John Mahama and the NDC stand vindicated and that I should, on behalf the New Patriotic Party (NPP) government, send them a large rock through him.
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I was amused but not surprised by his claim that the plant is the previous government’s legacy and a testament to its vision, and also his other claim that we now have a strategic asset.
Perhaps it might be useful to take a quick trip down memory lane on this saga.
Facts
The $510 million 250 MW AMERI power deal was signed between Ghana and Africa Middle East Resources Investment Group LLC (AMERI) in 2015, at a time when the country was reeling under a heavy power paralysis known as ‘Dumsor’.
The deal with the AMERI LLC was to shore up Ghana’s power supply.
The agreement was structured such that AMERI would be paid for the plant from the tariffs paid by consumers of the electricity it generates over a period of five years.
It was a Build, Own, Operate and Transfer (BOOT) agreement.
The then opposition NPP accused the then John Mahama government of overpricing the deal by $150 million because checks from the market (General Electric) pointed to the potential of the deal being struck at $220 million or even less.
The NPP said the John Mahama government contracted a ‘middle man’ (AMERI) who also contracted another ‘middleman’ (METKA) to purchase the plants from the original manufacturers, General Electric (GE), though the government was clearly aware that GE are the manufacturers and could have purchased the plants directly from them
The NPP further intimated that GE had submitted a proposal to VRA for a similar facility and this proposal was found satisfactory by VRA.
VRA's precarious financial position at the time could not permit it to enter into a rental agreement with GE.
President Akufo Addo on assumption of office, during his first State of the Nation Address (SONA), announced that his government was going to review all Power Purchase Agreements signed in the previous administration including AMERI.
The move was to prioritise, renegotiate, defer or cancel outrightly any power agreement that was not in the national interest.
The Majority in Parliament indicated clearly it wanted the AMERI deal rescinded and this charge was led by Member of Parliament (MP) for Adansi Asokwa, K.T Hammond, by filing a motion in Parliament.
A committee of enquiry was set up under the chairmanship of Mr Philip Addison to look into the matter.
The committee advised government to renegotiate the deal. The Energy Minister at the time, Mr Boakye Agyarko, led the renegotiations which led to an increase in the initial contract period of five years to 15 years and reduction of the cost of power from 14.6 cents to 11.7 cents per kilowatt hour.
Civil society groups, Institute of Energy Studies (IES), ACEP, IMANI Africa and the minority NDC criticised the deal.
On August 6, 2018 the deal was withdrawn and John Amewu replaced Energy Minister Boakye Agyarko.
The new minister led the renegotiation of the AMERI deal.
Under the renegotiated deal, AMERI agreed to have interests accumulated on the $90m outstanding debt from February 2017 through to July 2018 waived, while an agreement was reached with same on a payment schedule for the $90 million in the wake of government’s liquidity challenges in the power sector.
AMERI further agreed 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 two and a half years of the BOOT Agreement, leading to a trim of $63.75 million which was to 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 five per cent on condition of prompt payment by the government of Ghana. This extended the initial five-year duration by a year in simple terms.
There was also a full waiver of the 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 for 2019 and 2020 respectively.
In 2021, the Ministry of Energy expressed cognisance of the near expiration of the six-year duration and started preparations towards taking full ownership of the plant.
The Ministry of Energy also decided to relocate the AMERI Power Plant to Kumasi. According to Energy Minister, Dr Matthew Opoku-Prempeh, moving the Ameri Plant from its coastal basin to the middle belt would ensure the balancing of the voltage and the stabilisation of the power network
On Thursday, January, 20, 2022, after the ministry expressed satisfaction with the necessary rectification works, it formally took full ownership of the AMERI Power Plant on behalf of the government and the people of Ghana.
Difficulty
I do not quite see the head or tail of my friend’s rather giddy proclamation that the previous government deserves commendation for its ‘vision’.
Essentially, government at the time desperately went for the power plants to try to resolve a power paralysis that had been christened ‘Dumsor’, as a result of which the government was haemorrhaging valuable political capital.
The situation was clearly dire. The government had its back to the wall and the pressure was intense.
Ignoring for a moment that ultimately, a new government had to renegotiate significant aspects of the deal in a more favourable light for the state, how did acquiring the plant in an emergency situation in itself amount to vision for which reason praise-singing is due?
The fact of the acquisition of plant and subsequently, its intended relocation for the reason stated earlier does not automatically translate into vision in acquiring it in the first instance, when it was procured in desperation solely due to the power situation in the country at the time.
I have searched high and low for a rock to give to the previous government as suggested by my friend, but I cannot find even a pebble for the enterprise. Maybe I need a magnifying glass.
Rodney Nkrumah-Boateng. E-mail: [email protected]