General News of Thursday, 17 December 2015
Political pressure group Occupy Ghana has raised further queries on Ghana’s agreement with AMERI Energy and asked the Minister of Power to provide the full details of the agreement.
It noted, for instance, that the version of the agreement in the public domain did not include any Annexure, particularly Annex G, which reportedly contained the financial details of the transaction.
In a letter addressed to the Minister of Power, the group also queried as to whether Parliament saw the full agreement or only what was in the public domain.
The group also wanted to know if there was a Supply Agreement between Ghana and AMERI Energy for the supply of fuel and whether the agreement had received parliamentary approval under Article 18 (5) of the 1992 Constitution.
Below is the full statement
16th July, 2015
Ministry of Power
Attention: Dr. Kwabena Donkor
Agreement between Ghana and AMERI Energy LLC – Matters Arising
Our attention has been drawn to the above Agreement dated 10th February 2015, publications attributed to a Norwegian newspaper, Verdens Gang (VG), and your response to those publications contained in a Press Statement dated 14th December 2015. From our review of matters raised in each of the above, there appears to us to be more questions that beg for answers from you, as the sector Minister, the person who executed the Agreement on our behalf, and the person who obtained parliamentary approval for it.
1. In your press statement, you claimed that “the Government of Ghana… will not be making any payments for the cost of the equipment.” Then you claimed that “Ghana will however assume eventual ownership of the equipment after five (5) years of production and sale of power to the VRA.” Are we to understand you to be saying that there is no cost of capital component embedded in whatever rental/lease payments that Ghana would be making between now and the fifth anniversary of the Agreement? Are you saying that all we have to do between now and then is to pay for the electricity and nothing else; yet after 5 years, the equipment would automatically be transferred to us? Would that transfer not then involve exercising a purchase option and paying the actual cost of the equipment either as part of the rent/lease payments or on the fifth anniversary? We would be glad if you could clarify this part of your press statement.
2. Also in your Press Statement under reference, you appeared to admit that Ghana could have purchased the turbines outright for S220m each, as the Norwegian paper alleges, and is easily verified on the internet. However, you also claimed that that price “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.” Are we to understand you to be saying that it is the estimated cost of these additions that in part led us into a BOOT instead of a straight out purchase? If so, then you must have had an estimate of these costs to inform your decision. We would be glad if you could share those figures with us, so that we can also be satisfied that your decision to lease, instead of purchasing, is commercially sound.
3. Now to the Agreement itself, particularly clauses 3 (vii), 10 and 13. Can you justify why AMERI Energy was given tax and import duty exemptions, with a grossing-up provision in the extremely unlikely event that they nevertheless become liable to Ghana taxes? Was it that we could not find any contractor who would be willing to pay Ghana taxes for incomes that, clearly, would be derived in and accrue from Ghana, and which should, on the face of our tax laws, be tax assessable income?
4. Under clause 4 of the Agreement, Ghana was to provide an acceptable site for the installation and operation of the equipment. Which ministry or agency of government or contractor did the site preparation (civil works, etc.), and how much did that cost us? If it was by a contractor, was it a local or foreign contractor? If it was a foreign contractor, was parliamentary approval obtained? And, did that procurement of the contractual services go for competitive bidding or was it by sole-sourcing? And if it was by sole-sourcing, what was the reason for that?
5. You spoke of the Letter of Credit, which you somehow claimed to be the only financial outlay that the government was to incur, and which you claimed to be to the tune of US$51 million. However, in clause 5 of the Agreement, the LC (which is to expire only after 90 days of the expiry date of the term of the Agreement) does more than just pay for the power produced. It gives AMERI Energy the right to draw down funds under specified circumstances, namely (i) any payments past due (see section 11(f)), (ii) nationalization damages, (iii) any local taxes (see clause 13), and (iv) amounts due and payable under the Agreement. Clause 5 also specifically provides that whenever AMERI Energy makes a drawdown of the LC, we are to pay the amount drawn so as to retain the face value of US$51 million that you referred to. Thus the US$51 million is not a limit to our possible liability. It is a face value that we are to maintain at all times, and which means that we may pay way in excess of that amount, based on what happens in the execution of the transactions anticipated by the Agreement. Thus nothing stops AMERI Energy from claiming their full contractual sums and losses if those exceed the value on the face of the LC. May we therefore ask then, the relevance of you bringing up the LC in the portion of your statement that spoke about amounts payable under the contract?
6. Further, we note that Ghana is required to completely bear the commissions, charges, etc. associated with obtaining, confirming and maintaining the LC. Sir, which bank provided the LC and how much have we paid by way of commissions, charges, etc., and how much are we to pay in future?
7. Who bore the expense of shipping the AMERI Energy equipment to Ghana? Was it AMERI Energy or was it Ghana?
8. Under clause 9, Ghana is to provide the fuel for operating the equipment. Is there a Supply Agreement between us and AMERI Energy for the supply of fuel? If so where is that Agreement, and has it received parliamentary approval under article 181(5)? Has another government agency, possibly the VRA been made to enter into such a Supply Agreement? If so, would not that other government agency be considered an “alter ego” of the Government, which would mean that any such Supply Agreement would still require parliamentary approval? What are the terms of that Supply Agreement, and how were those terms factored into the overall cost of the transaction? Can you assure us that Ghana (or the selected agency) will be able to provide the required fuel at all times, because under that clause 9, Ghana is liable to continue paying for the “power” generated, even if none is generated because we have failed to provide or delayed in providing the fuel?
9. The version of the Agreement that we have seen does not include any Annexure, particularly Annex G, which reportedly contains the financial details of the transaction. Did Parliament see the full agreement or only what we have seen? Is it possible to obtain copies of all the relevant Annexure from your office?
Sir, kindly respond to these questions because in so doing, you will be providing more information to Ghanaians who are anxious to be assured that what we have entered into is the best deal possible under the circumstances.
Yours in the service of God and Country,