Dubai Power Deal Stinks

It has emerged that the NDC government will be spending a whopping $700 million for a total of 250 megawatts of emergency power from a Dubai-based company, Ameri Energy Group.

The government can make an outright purchase of the same power plant between $180 and $220 million, according to energy policy analysis group, Africa Centre for Energy Policy (ACEP).

The Mahama-led government rather wants to spend $700 million to rent the emergency power unit for a period of five years from Ameri Energy Group to solve the country’s protracted power crisis.

Dr Mohammed Amin Adam, Executive Director of ACEP, at a news conference in Accra on Monday, punched holes in some of the agreements reached by the government and foreign companies that are seeking to help it (government) solve the power crisis.

He said the Dubai deal ‘is a lease based on build, operate, own and transfer (BOOT) with a total of 250 MW of emergency power. The units consist of 10 sets of GE TM 2,500 power plants, each consisting of 25 MW.’

According to ACEP, the units would be leased to Ghana at about $120 million yearly in addition to $16 million for other contingencies that could shoot the cost up to $138 million, but excluding cost of fuel.

‘If we have $138 million to pay for one year lease, this could buy about six or seven of the units outright in Ghana,’ the ACEP boss stressed.

He insisted, ‘It does not make economic sense to rent the plants for $700 million for five years before taking ownership, when we could have bought them outright for $220 million.’

He said under the deal, GRIDCo is supposed to bear the cost of transmission interconnection, which had not been budgeted for.

Additionally, the ACEP boss said that the plant required 85 MW scf/day of fuel and it was to be sourced from the Atuabo Gas plant, adding, ‘On this basis, the gas meant for the T1 and T2 plants is to be displaced and run on the new 250 MW APR plant. The gas is estimated to cost $20 – $25 million.

‘The implication of the gas arrangement is that crude oil will have to be procured to run the T1 and T2. At the current crude oil price of $50bbl, the monthly cost is $25-$30 million but the total consumption of T1 and T2 at full operation is approximately 20,000bbl/day.’

Dr Adam pointed out, ‘This makes it difficult to run T1 and T2, given the history of VRA’s financial challenges.’

The Africa Centre for Energy Policy (ACEP) has therefore described as a ‘bad deal’, government’s quest to import emergency power plants into the country to mitigate the current power crisis.

Among the emergency power measures is the importation of two 450 Megawatt capacity barges from Karpower at a cost of $250 million.

Also, 250 Megawatts generating units from Dubai are being brought into the country in addition to a 300 Megawatt emergency plant by General Electric.

As far as the 450 Megawatt capacity barges are concerned, Executive Director of the think tank, Dr Mohammed Amin Anta, told journalists at a press conference that ‘There will still be structural issues that need to be addressed even when the lease agreement is completed.

‘We need to establish the state of the machines and prepare the place where they will be anchored offshore. The Tema site near the fishing harbour is yet to be prepared for the mooring and operation of the plant.

‘Experts say that this will be ready, at best, in the last quarter of 2015. We also need to work on the transmission interconnection. If these arrangements have not been factored into the timetable for deploying the barges, I am afraid it may be a dream.’

In his view, the GE-built plants which are being purchased from Dubai have no value for money.

By William Yaw Owusu

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