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Operators of Ameri must go for renegotiation of deal-IECP

Ameri Power Plant in Ghana

The Institute of Energy and Climate Change Policy (IECP) has charged operators of the Ameri Power Plant to accept the recommendations of the Philip Addison Committee and renegotiate the deal with government.

According to the institute, a relook at the terms of the deal will benefit both operators of the Ameri Power Plant, as well as the government of Ghana.

The Philip Addison Committee charged to review the Ameri deal advised government to renegotiate the contract or abrogate it on grounds of fraud.

Speaking to Citi Business News on the issue, the Director of Research and Policy at IECP Dr. Philip Adom advised the power company to accept the report and renegotiate the terms.

“If they are interested in doing business with Ghana then I will say that they will have to listen to the advice of going back to the table to renegotiate this whole contract so that at least there will be mutual benefit but if they are not interested then we will have a problem,” he said.

He was of the view that operators of the plant cannot be held liable for the deal since they negotiated in their best interest.

“If they are not the root cause, it is the responsibility of the other party to make sure that they [government the broker the deal] seek the interest of the nation, but if you fail to do that and just rush into the contract and later it comes out that actually the price was inflated then Ameri can only renegotiate the deal,” he argued.

He reiterated that even though the company can insist on the current arrangement it will however create tension between it and Ghana, hence a need to go back for a renegotiation.

Background

The committee charged to review, restructure and recommend areas of amendment of the Ameri power deal,recommended that the deal be re-negotiated or abrogated on grounds of fraud, after it emerged that Ghana was made to pay 150 million dollars extra in commission to Africa & Middle East Resources Investment Group LLC (Ameri Energy) for the construction of the power plant.

Ameri in its agreement with Government dated February 10th, 2015, charged Ghana significantly higher than what it was charged by the Turkish registered company – PPR, which financed and executed the project.

The Turkish firm pegged the total cost of the project which is to span over a 5 year period at a maximum of 360 million dollars.

Bloated Commission 

However in the Build Operate Own Transfer (BOOT) agreement signed between  Government and Ameri the deal was pegged at a minimum of 510 million dollars.

Leaving Ameri with a commission of 150 million dollars.

According to the 17 member committee inaugurated by the Energy Minister Mr. Boakye Agyarko on February 01,2017 to review the Ameri power deal, on grounds of that anomaly, as well other financial, technical and legal issues, the power company must be made to re-negotiate the deal or be rejected by Government on grounds of fraud.

The deal was signed as an emergency power agreement on the 10th of February, 2015, between Government of Ghana represented by the Minister of Power and Ameri Energy, to help reduce the country’s power deficit at the time.

According to the Committee chaired by private legal practitioner Mr Philip Addison, though the plant is currently operational a number of omissions and concessions made in the agreement are not only unfair but also not in the interest of Ghana.

Plant has no operating license

According to the committee’s report the Ameri Energy plant currently does not have an operating license.

The development, the committee states, is contrary to section 11 and 25 of the Energy Commission Act, 1997 (ACT 541) which requires the operators of the plant to secure the licenses and permits.

The committee urges that  Ameri Energy must get the required license and permits as soon as possible.

It adds that a Grid Interconnection Agreement must also be signed between the plant operator and the Grid operator (GRIDCo).

Meanwhile the Energy Commission (EC) is reported to have officially notified VRA that the Ameri 250MW plant is yet to secure an operational license.

Ameri and its third parties exempted from taxes payments 

The report also revealed that Government at the time also approved a wide exemption of taxes for Ameri and its third parties.

The maove meant that Ameri and all its affiliates and sub-contractors and third parties were not liable to pay any form of tax whatsoever in Ghana.

The Committee in its report stated that the move was not acceptable and directed that moving forward, contractors must be made to pay taxes such as corporate and income tax.

No due diligence was carried out on Ameri

According to the Committee’s report no due diligence was carried out on Africa and Middle East Resources Investment Group LLC (Ameri Group) nor Ameri Energy Power Equipment Trading LLC (Ameri Equipment).

Consequently GoG has no information on the shareholders and directors on either company.

Meanwhile, despite the Deputy Attorney General being present during negotiations and execution of the Agreement, there was no legal opinion on Ameri from the AG’s Department.

The committee recommended that in the future legal opinion from the AG’s department must be sought, to ensure that Agreements conform to the laws of the country.

Engineers and Planners paid for unfinished work

The committee also revealed that Government had the sole responsibility under the Agreement to provide a cleared, levelled and compacted site acceptable to Ameri Energy for the installation of the equipment.

This activity was contracted by Government to Engineers and Planners (E&P).

According to the report the two tasks under this responsibility remain to be completed by E&P namely, spread of gravel on the lay down area to Ameri’s specifications, and perimeter and access roads to the site.

But the report states that E&P have demobilized from the site without completion of the works, which it states is a breach of E&P’s contract with GoG.

Adding that it has been informed that Government has paid E&P for all works undertaken to date.

The outstanding activities have dire implications on the operation of the plant such as frequent replacement of air filters due to excessive dust, which negatively impacts on the plant’s availability, the report said.

By: Lawrence Segbefia/citibusinessnews.com/Ghana

Ghana Business News