Interview: Why We Missed the Opportunity to Stop the AMERI deal

Interview: Why We Missed the Opportunity to Stop the AMERI deal

By Ernest Armah

Background

The AMERI energy deal was an agreement entered on 10th February, 2015 between the government of Ghana represented by the Ministry of Energy and Africa and Middle East Resource Investment Energy (AMERI Energy). The deal according to the Energy Ministry is based on a Build, Own, Operate and Transfer (BOOT) approach and not an outright purchase of generating plants (10 turbines). Under the agreement, AMERI Energy will supply 10 turbines and operate them in generating electricity with fuel from Volta River Authority (VRA). 250 megawatts of power is expected to be generated by AMERI and after five years of operations, the government will take over the turbines. The AMERI deal costs US$510m. The 10 turbines over a 5-year period will cost US$102m (US$850,000 per turbine). METCA, subcontractors to run operations to generate power on behalf of AMERI Energy will get US$350m. So the excess US$160m that AMERI Energy is getting is for what? Also, would it not be a better deal to buy the turbines outright at their estimated cost of US$220m?

Odekro, a parliamentary monitoring organisation indicates that in March 2015, the committee on Mines and Energy then chaired by Mr. Cletus Avoka met on three occasions within the month to scrutinize the contract. The committee comprising 17 MPs in total (9-NDC; 8-NPP) scrutinized the AMERI contract costing the government of Ghana US$510m for 5 hours and 30 minutes. On the day the AMERI contract was approved by Parliament, 212 MPs were present (96-NPP; 112-NDC; 1-CPP; 3-Independent). The approval was without any debate. Now another 17-member committee headed by Philip Addison, Esq.  was established by the current government to do ex post facto assessment of the AMERI contract. The Addison committee says the excess payment is as a result of technical, financial, and legal loopholes. This suggests that the Sixth Parliament did a poor job examining the contract. But that is not the case.

The African Center for Energy Policy (ACEP) issued a press release detailing the troubling aspects of the contract and went further to engage Parliament with this information. This was prior to the signing and approval of the contract. So granted that Parliament did not see all the loopholes the Addison committee highlighted, ACEP covered their blind spots. One of the cogent recommendations ACEP made to Parliament was to issue letters of credit to VRA instead of AMERI Energy because AMERI had no track record and demonstrable capacity to generate power.

Interview Excerpts

I had an interview with Mr. Ben Boakye, acting Executive Director of ACEP to seek clarity on some of these issues. Below are excerpts of the interview highlighting public reaction to the contract and allegations of fraud.

*BB is for Ben Boakye.

Q: Ghanaians are angry about the AMERI contract now. But at the time your statement went out (energy crisis was rife), do you think the context, the general mood and frustrations downplayed the effect of your statement?

BB: You don’t have to blame the public. These are issues of policy. When a government takes a decision, you are not going to have the whole country come at government and say this is wrong. You have people with interest in the subject. That’s why those of us who were interested in the subject were playing that role for the public. So it was up to government to listen to what suggestions and options were on the table for consideration. So at the time if government did not listen to us but went ahead to take such a decision, you can’t blame the public for that.

Q: Is the amount of energy to be generated from this deal sufficient to effectively resolve our energy crisis?

BB: No, AMERI is just one of the many power agreements that have been signed. Because now the focus is on AMERI, we think that it is probably the worst deal we have signed during the crisis. But it was not. We have Karpower and many other terrible contracts that was signed over the period. AMERI is just one of them. That is why we’re happy that there is some attempt to try and renegotiate these contracts.

Q: The Addison committee cited a number of issues about the contract. What is your take on that?

BB: I think largely they highlighted the same things we have been talking about over the period. The deal is costing us too much money. Their assessment did not contradict any of the things we said except to conclude that the (contract) was fraudulent without giving us the basis of that assertion. If you can’t prove that AMERI connived with any of the officials to agree at that price (US$510m), then you haven’t established fraud. So I don’t know how they are going to proceed on that claim to renegotiate the contract.

The full interview is available on GhanaDecides facebook page.

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