ACEP sceptical of Power Minister’s denial of inflated cost in AMERI project

Dr. Kwabena Donkor - Minister of Power.
Dr. Kwabena Donkor – Minister of Power.

The energy policy think tank, Africa Centre for Energy Policy (ACEP) has expressed its scepticism about the Power Minister’s denial of inflating the cost of the AMERI power deal.

The think tank has upheld that the 10 turbines alone cost $220 million but is sceptical that the cost of auxiliary works and equipment which is being implied by government to account for the total of $510 million, could be as high as the difference of $290 million.

Denying the publication by Norwegian newspaper Vardens Gang that Ghana could have bought the 10 turbines for just $220 million dollars instead of $510 million, Power Minister, Dr Kwabena Donkor, said in a statement that the $220 million being quoted “is exclusive of all other costs such as auxiliaries, balance of plant, civil works, sub-station, installation of equipment, cost of financing, operation and maintenance etc.”

The Power Minister further said: “Under the agreement with AMERI Energy, the cost of all these auxiliary works is being borne by AMERI Energy.”

ACEP wants the Ministry of Power to confirm the costs of auxiliaries in the AMERI deal.

“It will certainly not escalate the costs to $510 million over five years”, the think tank believes.

“The question is if Government bought the turbines outright at $220 million, how much would it have spent to deliver them to Ghana and to install and operate them? Would that have cost $290 million?”, the think tank asked in a statement signed by its Executive Director.

According to ACEP also, Parliament approved the contract with wrong information.

It said that in approving the AMERI contract, parliament was informed that excluding other costs, the turbines alone would cost $411 million if bought outright, in contrast with the Power Ministry’s new admission that the cost of the 10 turbines alone is indeed $220 million, excluding auxiliary works and equipment.

“Whether Parliament would have supported the Build, Own Operate and Transfer (BOOT) arrangement if it knew the actual cost of the equipment was $220 million remains an open question.”

ACEP has also debunked the Power Minister’s claim that VRA will only pay AMERI for the power produced and supplied, like in other IPP agreements.

The think tank explains that it would be impossible for Ghana to pay for only the power produced, and take ownership of the turbines after five years, for the simple reason that AMERI “is not a charity” to bring 10 turbines and hand them over after five years without Ghana paying for their cost.

Payments for the turbines to be finally handed over to Ghana, would eventually amount to $510 million in five years – the $510 million has simply been spread over five years.

According to ACEP, AMERI, by the agreement, will be paid $8.5 million monthly for the ten turbines ($102 million per year), in addition to $16.6 million which will be paid as variable cost, all amounting to nearly $120 million annually.

In response to the Ministry’s claim also that an earlier offer by General Electric to the VRA was not found to be expedient, ACEP has also requested that the Ministry of Power make public, the offer that General Electric made to the VRA for the sake of transparency and to enrich public debate on the AMERI deal.

By Emmanuel Odonkor

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