Barely four years when Africa Centre for Energy Policy (ACEP), one of the energy sector think tanks, raised concerns about the cost involved in the Novation Agreement of 250 Megawatts Ameri Power Plant, there is yet another controversy emerging out of the cost of the relocation of the plant from Aboadze to Kumasi and its operation and maintenance cost.
According to the think tank, while the relocation of the plant is expected to cost the taxpayers US$35.6million, the operation and maintenance cost will cost taxpayers US$1 million per month for three years.
ACEP said this current arrangement is worse than the Novation Agreement which led to President Akufo-Addo relieving former Energy Minister Mr. Boakye Agyarko of his post.
Ameri Power Plant was procured by the erstwhile John Mahama administration through Africa and Middle East Resources Investment Group LLC for five years under Build Own Operate and Transfer (BOOT).
The controversial power plant cost Ghana US$510 million.
In February this year, Ameri Power transferred the plant to the Government of Ghana after the five-year contract had ended.
After its takeover, Ghana is relocating the power plant to Kumasi, the capital of the Ashanti Region, in a bid to address the persistent power fluctuations and low voltages in Ashanti Region and beyond.
At a news conference in Accra on Tuesday, Kodzo Yaotse, who is the Policy Lead, Petroleum and Conventional Energy at ACEP, said: “The Minister for Energy, in his 17th December 2021 letter to the Volta River Authority (VRA), quotes US$35.6 million as the cost of relocation. However, ACEP has sighted the original proposal from Mytilineos SA, dated 22nd March 2021 to the Ministry, quoting US$25.48 million for the same.
“Instead of negotiating the proposal of the sole-sourced offer downwards, the contract cost has instead increased by 40 per cent, and it is unclear what accounts for such a quantum leap from the proposal amount by Mytilineos SA.”
Another transaction ACEP uncovered in the Minister’s 17th December 2021 letter to VRA, is a US$1 monthly cost Mytilineos has been sole-sourced to operate and maintain the Ameri Plant for three years.
“According to the Minister, Dr. Matthew Opoku Prempeh, in Parliament on 1st July 2022, out of the 42 staff to the run the plant, VRA will provide 40 staff to support the operations. This is an admission that VRA can manage the plant as it is practically impossible for the two personnel from Mytilineos SA to be available 24/7 to operate the plant.
“It then raises the fundamental question of the precise role of the two personnel from Mytilineos SA to warrant the payment of US$1 million every month for three years,” Mr Yaotse contested.
An extract of a proposal by Mytilineos SA above
The Engineering, Procurement and Construction (EPC) and Operations and Management (O&M) contract to Mytilineos SA, as communicated to Parliament by Dr Matthew Prempeh were sole-sourced to Mytilineos SA, with the justification that the company has been the operator of the plant since inception and is, therefore, the best suited to deliver the contract, but Kodzo Yaotse and ACEP argued that, firstly, long-service is not part of the exceptional cases per the Private Public Agreement (PPA) Act to warrant sole-sourcing.
“Furthermore, Mytilineos SA is not the only company with the capacity to relocate trailer-loaded aero-derivative turbines. There are local companies that can deliver the EPC for Ghana,” he challenged the sector Minister.
Recalling a similar significant over-pricing contract in the inept novation agreement in 2018 when the same Mytilineos SA attempted to take over the Ameri contract, ACEP expressed shock at how the same Mytilineos SA had survived the botched novation to reappear with another cost-dynamic sole-sourced contract.
Given this, ACEP demanded that Dr. Matthew Opoku Prempeh provides Ghanaians with convincing answers.
Responding to some issues raised by ACEP while speaking on Accra- based Peace FM, Dr. Matthew Opoku Prempeh, the Energy Minister, is quoted to have said: “ACEP is only against the Ameri plant relocation because it is going to Kumasi,” connoting tribal hate of ACEP for the people of Kumasi.
But a statement from the think tank rejected the Minister’s assertion, saying: “ACEP is not against the location of a power plant in any part of Ghana. We analyze the decisions of the Energy Ministry based on their strategic or proprietary fit at a particular time. In our statement, we were emphatic that there may be a need for power generation in the middle belt in the medium to long term. However, with the cash-strapped power sector managed by the same Minister, the most optimal decisions must be prioritized. The power sector’s financial situation is worsening every year and requires decisions that, at the barest minimum, reduce the burden and not add on. In 2020 and 2021, the government shouldered total under-recoveries from the sector to over GHS 14 billion (GHS 6.8 billion in 2020, and the cedi equivalent of $1.257 billion in 2021).
“In addition, the sector’s outstanding payments for gas and IPPs are more than $1.2 billion (GHS9.6 billion) for the first half of 2022.”
The Minister is also said to have alleged that the think tank sent its press statement to the opposition party NDC.
According to the think tank, “This is completely false. The Minister cannot provide any evidence to back this claim. Our statement was first read at about 10:15 am and broadcasted on Zoom and Facebook in the presence of the media. Any evidence or trace before this time would confirm what the Minister is claiming. It is important to note that our statements are public documents available to the government and the opposition.”
Additionally, the Energy Minister is also said to have claimed that “VRA is leading the negotiations and not the Ministry of Energy.”
But ACEP, according to all the available evidence showed that the Ministry, at all times, has been Ghana’s negotiating party.
“The proposal from Mytilineos SA for $25.48 million was submitted to the Ministry. The Ministry did the negotiations, applied for PPA approval for $71.6 million ($35.6 million for the relocation and $36 million for the operations and maintenance) and sought the legal opinion of the Attorney General’s office for the contract. It was after these that the VRA Senior Staff Association wrote to protest the negotiations are done by the Ministry.”
Metka_Proposal for Relocation (1)
Source: https://energynewsafrica.com