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Business News of Friday, 14 December 2018

Source: Myjoyonline.com

$51.3 million saving on AMERI deal commendable - ACEP

Energy think tank, Africa Centre for Energy Policy (ACEP), has commended the government for making a saving of over $50 million on the AMERI power contract renegotiation led by Energy Minister, John Peter Amewu.

“The addendum presents a more favourable liability for government than the original contract terms; proposing a saving of $51.3 million.

“This delayed outcome is a result of direct engagement with the contractor who had delivered on the expected terms of a binding contract, for which reason ACEP was convinced from the beginning that good faith was the only ingredient required for a renegotiation,” ACEP said in a release on the new contract.

Read ACEP’s full comments on the new deal below.

$51.3 MILLION SAVING ON AMERI DEAL IS COMMENDABLE

11th December 2018

The Africa Centre for Energy Policy (ACEP) has seen the addendum to the AMERI contract submitted to parliament through a joint memorandum by the Ministers of Energy and Finance (Hon. John Peter Amewu and Hon. Ken Ofori-Atta). The addendum presents a more favorable liability for government than the original contract terms; proposing a saving of $51.3 million. This delayed outcome is a result of direct engagement with the contractor who had delivered on the expected terms of a binding contract, for which reason ACEP was convinced from the beginning that good faith was the only ingredient required for a renegotiation.

The renegotiation arrived at some savings on the variable charges and the capital recovery charges. Clause 1(J) of the addendum provides a complete waiver of the remaining variable charges as follows; In consideration of GOG's commitment to clear the complete payment backlog under the BOOT Agreement (from February 2017 till July 2018), AMER! agreed to waive its variable charge (0.005USWkwh) from September 2018 until the remainder of the term of the BOOT Agreement (expiring January 2021), capped at a ceiling of US$16.6 million per year, generating savings for the Government of Ghana of up to USS41.5 million in total.

On the capital recovery of the $510 million in the original contract, AMERI provides conditional and unconditional rebates. It also agrees to extend the payment period to 6 years instead of the original 5 years to decouple fiscal tenure from technical/operational tenure of 5 years of the contract. This reduces the annual recovery payment of $102 million to $76.5 million or monthly payment of $8.5 million to $6.375 million for the remaining two and half years. The difference between the new annual payments for the two and a half years and the original contract is $63.75 million. Out of the $63.75 million, AMERI waives $7 million to government unconditionally. An additional $2.8 million will be waived on condition that GoG respects the payment schedule agreed in the addendum.

In addition, all default charges and interests on the outstanding payments have been waived. Government has agreed to a payment schedule for the outstanding $90million it owes to AMERI in a four-payment schedule in November 2018 ($10 Million), January ($30 million), February ($25 million) and March 2019 ($25 million). It is our understanding, however, that the November payment has already been in default.

ACEP commends Government for bringing closure to the disagreements. We recommend that the payment schedule of debts be duly followed to allow government benefit from the full cost saving of the $2.8million waiver by AMERI. We also recommend that similar closures should be brought to all contracts under renegotiation to allow for proper planning of the power sector which is inundated with many challenges.

Singed

Benjamin Boakye, Executive Director

Location: Avenue D, Hse. No. 119 D, North Legon