Business News of Tuesday, 16 October 2018
Energy Minister John Peter Amewu is claiming the government has saved $50 million in yet another renegotiated AMERI deal.
It will be the second renegotiation of a highly controversial power deal by the government after the first was heavily criticized.
Amewu told Evans Mensah on PM Express, a current affairs programme, on Joy News, Monday evening, that government has concluded another renegotiation of the old deal.
This means the Novation Agreement that the current government sent to Parliament to replace the original agreement under John Mahama has also been thrown out.
According to the Minister, the country has saved “above $50 million” under the new terms agreed between the state and the Dubai-based AMERI Energy.
He also said on the late-night show that government’s inability to cancel the power purchasing deal it had criticised while in opposition is completely justified.
Controversial Novation Agreement
Despite widespread condemnation from the public and energy think thanks, President Nana Addo Dankwa Akufo-Addo approved the renegotiated Ameri deal (the Novation Agreement) by an Executive Order.
That deal is currently in Parliament awaiting a formal notice of withdrawal by the Energy Minister.
A statement by the President’s secretary, Nana Asante Bediatuo stated that “the President of the Republic of Ghana has granted executive approval for the Novation and Amendment Agreement dated July 20, 2018 between (i) the Government of the Republic of Ghana represented by the Minister for Energy ( or his authorised representative), (ii) Volta River Authority(VRA), (iii) Africa and Middle East Resource Investment Group(AMERI ENERGY), (iv) Ameri Energy Power Equipment Trading LLC ( AMERI EQUIPMENT), (v) Power Projects Sanayi Insaat Ticanet Limited Sirketi (PPR), and (vi) Mytilineos International Trading Company AG (Mytilineos), for operations and maintenance of the existing 250MW AMERI Thermal Plant at Aboadzi, for a period of 15 years.”
The Novation Agreement had been criticised on grounds that it was worse than the previous one that was condemned by the New Patriotic Party (NPP) while campaigning to win power in the lead up to the 2016 elections.
Africa Centre for Energy Policy (ACEP), for instance, said the new deal will cost the country more after the 15 year period.
ACEP said it expected that a renegotiation of the contract with AMERI, which costs $510 million to the state, would achieve better terms for the country.
“But from ACEP’s analysis, the proposed amendment to the AMERI agreement brings the greater cost to government than the existing deal,” ACEP had criticised in the heat of the opposition to the renegotiated deal.
The Institute of Energy Security (IES) also said the country risks paying more when the deal is agreed upon, in its current form.
Under the Novation Agreement, a new company, Mytilineos International Trading Company, will take over the management of the AMERI power plant for 15 years.
The new company has offered to pay AMERI an amount of $52,160,560, with the government paying the remaining $39 million to the Dubai-based AMERI Energy to wash its hands off the deal entirely.
Novation agreement withdrawn, old deal renegotiated
Speaking on PM Express, Mr Amewu explains, “formally I will go to Parliament and withdraw the Novation Agreement and I will replace the Novation Agreement with the new one.”
This new deal that will replace the controversial Novation Agreement is, however, yet to reach Cabinet, the Minister revealed.
“This savings that we are doing now is just for two and half years. And so if we are saving almost $ 60 million in two and half years, if we are to work [for longer periods of time] it should tell you that we could be saving more than $100 million,” he justified the new deal.
Ameri has come to stay, the Minister admits.
Mahama’s controversial deal
John Mahama’s government in 2015 courted fierce controversy when it signed a contract with Africa and Middle East Resources Investment Group (AMERI) Energy, to rent the 300MW of emergency power from AMERI.
The deal, which cost the country $510 million was necessitated by the country’s debilitating power crisis at the time.
Government under Nana Addo Dankwa Akufo-Addo said it has evidence to prove that the previous government had caused the state to overpay for the power deal by some $150 million.
The government subsequently presented the Novation Agreement to Parliament as it kickstarted a process to withdraw the old deal.
That Novation Agreement is what has been withdrawn, according to the Energy Minister.