ACEP’s Response To The Statement By The Ministry Of Power On The Ameri Energy Power Project

We wish to commend the Minister of Power for providing clarifications on the AMERI power deal in a press statement following a publication by a Norwegian Newspaper, which also quoted ACEP’s views on the deal. However, the statement provides further questions that need urgent answers.

Under normal circumstances, we would not have responded to the statement because it was not directed at us. However, given that we were the first to raise issues relating to the deal in March 2015; our interest is further strengthened by our quest to ensure an informed public discourse on it. Our response to the statement is therefore articulated as follows.

Ministry of Power: The Ministry wishes to state that the agreement with AMERI is a Build, Own, Operate and Transfer (BOOT) agreement and not an outright purchase of generating plants.

Response: The monthly fees to be paid by VRA for the power produced in the BOOT arrangement inherently includes the leasing or payment charges for the turbines over the five-year period. Indeed since it is the Government that is supplying the fuel through VRA, it stands to reason that all the payments to be made to AMERI consists of the leasing charges as well as O&M costs. So while there is no doubt that it is not an outright purchase (which would have been the best option for Ghana), the cumulative payments to be made over the BOOT period of 5 years constitute the cost of procuring the turbines. What the BOOT arrangement has only done is to spread the payments over a five-year period. The key issue is whether the spreading of payments for a US$220 million project over 5 years end up as US$510 million excluding O&M costs, given that the benchmark cost of capital (Libor) is less than 1%? Is this value for money?

Ministry of Power: The Government of Ghana has not made ANY PAYMENTS to AMERI and will not be making any payments for the cost of the equipment.

Response: This is erroneous. We know that Government has not made any payment to AMERI. But when VRA makes the monthly payments prescribed by the contract, it will constitute payment for the turbines and the use to which it is being put. Indeed for the entire 5 years, these payments are to be made to AMERI. AMERI will be paid US$850,000 per turbine per month. This will amount to US$8.5 million for the ten turbines, with cumulative annual payments of US$102 million. In addition, an amount of US$16.6 million will be paid as variable cost. This brings the total payment due to AMERI and its partners to almost US$120 million.


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