Skip to content

The Newly Proposed AMERI Deal Doesn’t Make Sense

July 31, 2018

The existing AMERI deal of US$510 million over a period of 5 years is expected to expire in the next two years (2020). And after the expiration of the agreement, the Government of Ghana will own the plants. The existing deal is a BOOT (build, own, operate and transfer) arrangement.

So the then NPP in opposition said they will review the deal when they come into power. According to them (and other civil society groups such as IMANI), the existing deal was overpriced by about US$150million being paid to AMERI for their role as ‘middlemen’. AMERI is technically a Developer (not a middleman) who engaged the services of an EPC (engineering, procurement and construction firm) to BUILD and OPERATE the 10 plants, but AMERI will OWN the plants, and TRANSFER them after the 5 years to the Government of Ghana.

When the NPP came to power, Ghanaians were expecting to see a renegotiated better deal. However, what the current government is proposing to be passed by the Parliament of Ghana, is a worse deal than the existing one.

Under the new proposed deal, the Government of Ghana is bringing in a new ‘middleman’ to replace AMERI. But remember that AMERI has just two years under the existing deal to transfer the ownership of the plants to the government. However, the new ‘middleman’, in this case Mytilineos (a company owned by the owners of METKA, the same EPC firm employed by AMERI) is going to operate the power plants on behalf of the government for the next 15 years.

METKA (the EPC firm employed by AMERI) is charging AMERI US$72million every year for five years under the existing deal. Now, the same METKA is now going to charge Mytilineos (remember Mytilineos is owned by the owners of METKA) US$75million (instead of US$72million under the existing deal) for the next 15 years.

The VRA, which is currently the off-taker (representing government) of the AMERI deal is also supplying the gas to AMERI for the power plants.

So here are my takes on why the newly proposed deal doesn’t make any sense.

1. In the next two years the government will own and operate the plants. The VRA can operate them. So why renegotiate a deal which will expire in the next two years, to another 15 years?

2. The NPP then in opposition accused the NDC of introducing a ‘middleman’ who did nothing but pocketed US$150million. So why is the NPP now in government also introducing a new ‘middleman’ in the form of Mytilineos? What special operation is Mytilineos going to do that the VRA can’t?

3. There is also an argument on the reduction in the cost of tariff under the new deal. This is a flawed argument. Under the existing deal, we are paying 14.6 cents/KWH, and we have just two years to be done with this payment. Under the proposed deal, the new tariff will be 11.7 cents/KWH for 15 years. If the government allow the VRA to assume ownership of the plants in the next two years, Ghanaians can even pay less tariff than the proposed 11.7 cents/KWH.

We need serious answers from the government. So far the deal doesn’t make any sense to me at all!

Mahmoud Jajah
#ThoughtsOfAZongoBoy

Advertisements

From → Politics

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: