Ghanaians Likely to Pay More for Electricity If New AMERI Deal is Approved  

ECG

Accra, Ghana, July 30, 2018//-Consumers in Ghana are likely to pay more for electricity consumption if parliament approves the new AMERI deal, according to energy experts.

The government on Wednesday laid a paper in Parliament for the amendment of the controversial $510 million Africa & Middle East Resources Investment Group (AMERI) deal.

It plans to hand over the deal to a new company Mytilineos International Trading Company AG subject to parliamentary approval of the new bill, which it claimed will lead to the savings of $405 million dollars to the state in the new deal.

The government in the new agreement will pay Ameri $39 million while the new entity will also pay $52 million to Ameri on behalf of the government of Ghana.

But energy electrician experts from electricianinperth.com.au say consumers will end up paying more for electricity when the deal is approved.

“I don’t understand why we should now understand the deal and pay more money. What is the rush, why do we have 15 year duration?” he quizzed.

“If the idea is to get consumers pay less for electricity, then I’m afraid this will rather make them pay more. Consumers will pay more at the end of the day, and this is not right,” he lamented. Additionally, some states require continued education for Excellent Licensed electricians. Often a four to 6 hour class is required before the electrician’s license are going to be renewed by the state. one among the most reasons for this is often to insure that electricians stay informed of updated or new regulations within the state or within the National Electric Code. one more reason the continued education is required is for the security and protection of consumers and electricians themselves.

Executive Director of the African Centre for Energy Policy, Ben Boakye says the new deal does not give value for money

“For what we have seen that we are losing a lot of money. There’s a cost of a 270 million that Ghana will have to pay, which is way above whatever we are saving as purported by the government. We don’t see value for money in this deal,” he highlighted.

The Akufo-Addo administration has taken steps to amend portions of the $510 million AMERI deal signed by the John Mahama administration.

A Mines and Energy Committee meeting in Parliament to peruse the new AMERI deal ended inconclusively last week

Members of the committee are waiting to be furnished with what they say are four important documents to support the approval of the new agreement.

Meanwhile, the Institute for Energy Security (IES) is appalled by the lack of due diligence in the re-negotiation of the AMERI deal by the government.

The Institute in a statement said the deal presented to the Joint Committees of Parliament is frost with misleading figures and inaccurate claims which may eventually line the pockets of individuals, and overburden the Ghanaian with a high cost of electricity.

IES says it is “surprised by the Energy Ministry’s decision to introduce a third party, Mytilineos International Trading Company to take over the operation of the AMERI power plant at a proposed Capacity charge of 3.8052 US Cents/KWh for a 15-year period with an applicable tariff charge of U.S. Cent 11.7125/KWh; two and a half years into Ghana owning the power plant.”

In a statement copied to Joy News, the IES says it is convinced beyond all doubts that the Novated and Amended AMERI agreement was “poorly renegotiated” if at all, and will call for the withdrawal of the entire agreement, in the supreme interest of Ghana and her taxpayers.

Full statement below

REVISED AMERI DEAL: A RIP-OFF OF THE GHANAIAN TAX PAYER

  1. The Institute for Energy Security (IES) is scandalized by the lack of due diligence that characterizes the re-­negotiated agreement between the Government of Ghana and the Africa & Middle East Resources Investment Group (AMERI Energy), and currently before the Joint Parliamentary Committees on Finance, and on Mines and Energy.
  2. In its current form, the deal presented to the Joint Committees of Parliament is frost with misleading figures and inaccurate claims which may eventually line the pockets of individuals, and overburden the Ghanaian with a high cost of electricity. The Institute for Energy Security can confidently conclude that; “the agreement is worthless, immoderate, and rather awful compared to the existing agreement signed in 2015”.
  3. On 10th February, 2015, the government of Ghana under the previous administration represented by the then Power Ministry entered into an agreement with AMERI Energy to Build, Own, Operate and Transfer (BOOT) a Power Plant by installing 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. The cost of each of the 10 units of the Plant was $850,000 per month, totaling $102 million per year, and $510 million for 5 years. It was agreed that government will own the Power Plants after the end of the 5th year.
  4. The Government of Ghana has over the past two and half years paid an amount of $171 million to AMERI out of the $510 million. The outstanding balance of $339 million is due to be paid over the next two and a half years. Under a capacity charge of U.S. Cents 5.6253/KWh, the applicable tariff charge for Ghana in the first 5 years of the AMERI deal is U.S. Cents 14.5918/KWh, and from the 6th to the 20th year the tariff to apply is U.S. Cent 10.4149/KWh. This translate into an average applicable tariff of U.S. Cent 11.4591/KWh over the 20 year period.
  5. The above is independent of the $150 million “over-pricing” allegation government has raised over $510 million existing AMERI agreement. It is noteworthy that government has taken no steps towards answering questions on such claims.
  6. IES is surprised by the Energy Ministry’s decision to introduce a third party, Mytilineos International Trading Company to take over the operation of the AMERI power plant at a proposed Capacity charge of 3.8052 US Cents/KWh for a 15-year period with an applicable tariff charge of U.S. Cent 11.7125/KWh; two and a half years into Ghana owning the power plant.
  7.  this proposed Mytilineos deal, IES notes that for the next two and a half years for which Mytilineos will be running the AMERI Power plants, Ghana will gain marginally as the current applicable tariff charge of U.S. Cent 14.5918/KWh will be reduced to U.S. Cent 11.7125/KWh, a difference of U.S. Cent 2.8793/KWh and a capacity charge difference of U.S. Cent 1.8201/KWh. However in the proceeding twelve (12) and half years phase of the contract, Ghanaians stand to lose the benefit of enjoying the U.S. Cent 10.4149/KWh tariff in the existing Ameri deal, and are rather going to pay in excess of $1 billion dollars to a needless operator, as U.S. Cent 10.4149/KWh would have been substituted for U.S. Cent 11.7125/KWh.
  8. Government has called the Novation and Amendment agreement a ‘renegotiated deal’ because it has adjusted contract price and established a new financial equilibrium to reflect the extension of the term for the provision of the services under the AMERI performance obligation. IES however sees no ‘renegotiation’ in the entire AMERI agreement; and if at all, the Ministry of Energy did a poor job. It is our considered opinion that the proposed agreement is an insult to “value for money”, unreasonable and an extended rip off that must not be passed by Parliament in its current form.
  9. We are also aware that the President of Ghana by a letter with reference number OPS/82 Vol 5/18/964 dated July 25th, 2018, gave approval to the Energy Minister to proceed with the Novated AMERI agreement with Mytilineos. We want to believe the President was not given the full benefit of the whole picture regarding this deal, which we have cause to label as “dubious”.
  10. We also note that the Integrated Power Sector Master Plan (IPSMP) concludes that the net dependable power capacity in Ghana was 3950MW as at December 2017, with an additional 900MW scheduled for 2019; against an estimated average peak demand (including a 20% reserve margin) of 3200MW within the period 2018 and 2022. The additional capacity of 900MW exclude the Volta River Authority’s (VRA’s) Thermal Generation Projects of 632MW between 2020 and 2026.
  11. Indeed, the Supply Plan simulations conducted by VRA shows that the AMERI Plant would literally be redundant between 2019 and 2023 as it will have a utilization factor of less than 20% within the period. This simply suggest that there is no need to commit Ghana’s money further into the AMERI Agreement.
  12. It has also not escaped our attention that the Energy Ministry failed to provide a detailed “value for money audit” of the new agreement, and also failed to seek the Public Utilities Regulatory Commission’s approval of the contractual applicable tariff charges, as well as the Finance Ministry’s approval.
  13. The Institute for Energy Security is convinced beyond all doubts that the Novated and Amended AMERI agreement was “poorly renegotiated” if at all, and will call for the withdrawal of the entire agreement, in the supreme interest of Ghana and her taxpayers.

 

Signed:

Paa Kwasi Anamua Sakyi

(Executive Director, IES)

 

 African Eye Report/3news 

 

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