General News of Monday, 14 December 2015
A communications consultant with the Energy Ministry has said the criminal history of Umar Farooq Zahoor, who signed as a witness to a power purchase agreement between the Government of Ghana and the AMERI firm, is “tangential” to the sanctity of the contract.
According to Edward Bawa, “the due diligence we conducted on AMERI was to see whether they can do x, y, z …” and, so, a revelation by Norwegian newspaper, VG, that Mr Zahoor is a criminal who is wanted by Interpol is neither here nor there, as far as the sanctity of the contract is concerned.
“I am saying that we should not concern ourselves with the fact that an employee of that particular place, who is not even the principal signatory to the agreement, has a chequered history and on the basis of that we will question if due diligence was done.
“…As we speak now the plant is here in Ghana and being commissioned, so, at least, we have made all the various checks to know that they could deliver the plant and they have delivered, so, as to whether Umar Farooq is a thief, he’s a fraudster, is tangential to the main issue,” Mr Bawa stressed in an interview with Ekow Mensah-Shalders, host of class91.3fm’s Executive Breakfast Show.
According to VG, the 225MW AMERI plant could have been bought by the Government of Ghana for $220 million instead of being burdened with the responsibility of paying $510m for a Build, Own, Operate, and Transfer (BOOT) agreement.
Meanwhile, the Government of Ghana has issued a statement saying it has “not made ANY PAYMENTS to AMERI and will not be making any payments for the cost of the equipment.”
In a statement signed by Power Minister Dr Kwabena Donkor, the Government said: “Per the agreement with AMERI, the Government of Ghana through the Volta River Authority (VRA) will only make payments to Ameri for power produced and supplied to the VRA just like any other Independent Power Producer (IPP).”
Also, per the agreement, Government was required to provide a standby Letter of Credit (LC) for an amount of US$51 million, which LC has been raised.
Ghana will however assume eventual ownership of the equipment after five (5) years of production and sale of the power to the VRA.
It must also be explained that the quoted price of $220 million in the Norwegian story for outright purchase of similar turbines 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.
Under the agreement with AMERI Energy, the cost of all these auxiliary works is being borne by AMERI Energy.
From the foregoing, it is false to claim that the Government of Ghana signed a $510 million agreement for the plant, when it should have been $220 million.
On claims that the manufacturers of the plant, GE, could have been contacted to negotiate a direct purchase, the Ministry wishes to state that an earlier offer from GE Consortium to the VRA for similar equipment on rental basis proved to be far more expensive and was therefore rejected by the VRA.
ISSUE OF DUE DILIGENCE ON AMERI ENERGY POWER PLANT
The Government of Ghana has not entered into any agreement with Umar Farooq Zahoor. The Government of Ghana has an agreement with AMERI Energy.
The Chairman of AMERI Energy is Sheikh Mohamed AL Maktoum who signed the agreement for his firm. Umar Farooq signed as a witness for him.
The Bank of Ghana, before establishing the Standby LC, conducted its own due diligence on AMERI Energy.
The American firm, JP Morgan, also independently conducted its own due diligence before confirming the Standby LC for the project.
Government of Ghana, represented by the Ministry of Power and the Attorney General’s Department, also conducted due diligence on AMERI Energy and reviewed strenuously the project agreement before submitting to Parliament.
Parliament, upon receipt of relevant documentation on the project and the agreement, also scrutinized and reviewed the agreement before approving it at the Committee level unanimously and later by the House.