The Implications Of The “AMERI” Power Deal

At the time it was announced that the Government of Ghanahad entered into an agreement – called the “Ameri” deal – to install power generators that would bring an end to the “Dumsor” phenomenon that had been torturing Ghanaians to breaking point, it seemed churlish to over-questionany aspectof the“deal”.

The freezers in Ghanaians' homes had become “cupboards” in which any fresh thing deposited would begin to smell in exactly six hours dead.

Any iced drink was welcomed like nectar; sugary drinks became as treasured as drinks certified to be healthy – so long as they were iced.

Ghanaians were, literally, at the mercy of “ice”.

And then the people in our power industry announced that they'd got a solution to the problem. Okay, so the solution wasn't coming from the United States or Germany, the countries known to deliver very good technical solutions of all sorts. But does a beggar have a choice? We were short of foreign exchange, and needed to find companies that would “pre-finance” our power scheme(s). No matter where they came from.

Even so, the “deal” that was tossed into our laps was a very strange one. Although it would commit Ghana to a total expenditure of about half a billion dollars, it was single sourced!

What? Yes! Even our largest and most politically sensitive project ever, the Volta River Project, was put to competitive tenderand the best bid accepted. The dam was not built by an American company but by an Italian one, even though USAID and the World Bank were involved in financing it. Which meant serious American money was both directly and indirectly involved.

The Senior Staff Association of the Volta River Authority went to Parliament – unusually – to protest against the terms of the “Ameri” deal when they saw its detailed provisions. But no-one listened to them. Even the minority in Parliament agreed. For emotionalblackmailseemed high in the air. Had the VRA not “sat down” and allowed “dumsor” to happen? Now that someone had managed to obtain a deal that would end “dumsor”, they were protesting against it? Nonsense! As for the minority MPs, could they withstand a charge that they were responsible for "dumsor" continuing to exist? That charge bwuldncertainly be made -- if they shot down the agreement.Even so, they now claim that the agreement they passed in Parliament differed from the one that was eventually effected. Ugh? If that's proved,what are the legal implications?

Well, had the NDC retained power in the December 2016 election, we obviously would have heard the last of the “Ameri” deal. But the NDC was booted out. And one of the beautiful things about democracy is that those who are elected to power can do what they like only as long as they remain in power.

When that power is transferred to a new Government through elections, that new Government is as entitled to look into the deals of its predecessor, as its predecessor was entitled to enter into the deals. And it's all according to the law of the land.

However, it is precisely to avoid an unsavoury “you enter into a contract/I look into that contract” see-saw situation, that Governments in power are admonished to pay attention to public opinion; and if possible, to seek bi-partisan agreement on important issues. For the Opposition can become the next Government in the twinkle of an eye, and if the previous Government had ignored their views and entered into contracts they find dubious, they will, as sure as sunrise, kick against the contracts and examine them with a fine tooth's-comb, when they get the chance.

Indeed, in the “Ameri” case, no-one should be surprised that it was pushed into the post-mortem cubicle as soon as its authors lost power. Such a bad “scent” of corruption had emanated from it that the NPP handed it to a 17-member committee, headed by one of its top lawyers, Mr Philip Addison. (Mr Addison led the NPP team that fought in the Supreme Court against the verdict declared by the Electoral Commission in the 2012 election).

What has the Addison Committee found?
(1) That Ameri Energy is making a commission in the sum of US$ 150 million over the five-year term of the Agreement. Now, $150m commission over five years works out at $15m per year, which in these days of low lending rates the world over, is over-generous beyond belief. Not even “vulturefunds” are fetching such a high return!

(2) The deal was not only grossly unfair to the interest of Ghana, but aspects of it do constitute fraud.

(3) In the committee's view, Ameri Energy should be invited back to the negotiation table to rectify the anomalies in the agreement so that the Government of Ghana may “claw back a substantial portion of the over US$150million commission.”

1. In the event that Ameri Energy refuses to come to the negotiation table (advises the committee) refer to the Government of Ghana “should repudiate the Agreement on the grounds of fraud.”Now, that is as serious as it gets, for ”repudiation” has occurred in Ghana before: I refer to 1972, and of course, the more recent Woyome case.

(4) Henceforth (the committee further recommends) no Power Purchasing Agreement should be entered into by any public utility unless it is [done under] a full competitive bidding process.”

1. A revealing observation made by the committee is this: the Attorney General’s Department, then headed by Mrs Brew Appiah-Oppong, did not give a legal opinion on the “Ameri” deal! That's very difficult to believe, I must say.

2. No due diligence was carried out on Africa and Middle East Resources Investment Group (Ameri Group), as well as Ameri Energy Power Equipment Trading (Ameri Equipment). Consequently, the Government of Ghana has no information on the shareholders and directors on either company! Were some Ghanaian politicians”dashed” some shares in the two companies? We shall probably never know!

(7) The NDC government approved a wide exemption of taxes for Ameri and its third parties. Basically, Ameri and all its affiliates and sub-contractors and third parties are not liable to pay any form of tax whatsoever in Ghana.

1. In its bid to resolve the power crisis (“dumsor”), the NDC government entered into a Build, Own, Operate and Transfer agreement with Africa & Middle East Resources Investment Group LLC (“Ameri Energy”) on February 10, 2015 to help reduce the power supply deficit at the time. The agreement was signed on the basis of an emergency and was expected to be delivered within 90 days after the fulfilment of the specified conditions. However, “the delay in implementing the BOOT Agreement defeated its classification as an emergency project.”

2. Ameri Energy is making a commission in the sum of US$ 150 million over the five-year term of the Agreement. Additionally, the Agreement incorporates a variable charge of $0.005 cents per kilowatt hour which totals $16.6m per annum. But, says the committee, this “total annual fixed figure of $16.6m is erroneous. Thus Ameri’s actual commission is significantly higher than US$150 million. These figures [the committee recommends] must be reconciled and renegotiated to reduce the overall financial obligation on the Government of Ghana and render the Agreement more equitable.”

(10) Currently, under the BOOT Agreement, Ghana pays USD8.5million as take-or-pay charges on a monthly basis, irrespective of whether power is delivered or not. The committee's recommendation is that there should be a review of this provision..

(11)The committee further stated: “Amendments to the Boot Agreement require parliamentary approval [and] the Addendum contains provisions that have a significant impact on the project. One such provision is the assignment of the Agreement from Ameri Energy to Ameri Power Equipment Trading LLC. The failure to obtain parliamentary approval [for that provision] renders the Addendum void.”

(12) Expanding on the last finding, the committee said: “The assignment from Ameri Group to Ameri Equipment was carried out without the consent of the Government of Ghana in spite of an express requirement to seek prior consent in the contract. Furthermore, the date of the Assignment precedes the addendum!”

(13) The committee found out that a Value for Money audit report carried out by a reputable accounting firm did not highlight the key flaws with the project. It also did not state the accounting firm's professional opinion on the financial viability of the project. The Committee noted that [as at] the date the Value For Money audit report was presented, the BOOT Agreement had already been signed!

(143) The Committee noted further that “The wording of the Standby Letter of Credit (SBLC) established, differs significantly from that contained in the Agreement that went to Parliament. Secondly, the wording of the SBLC is too wide as it gives Ameri the opportunity to withdraw all $51million [specified in the SBLC] after collecting the required payments. There is no requirement to give notice to the Government of Ghana (GoG) before calling on the SBLC.”

The report added that [under the BOOT Agreement] Ameri does not have any incentive to generate the full 230 MW contractual capacity” and this is because the BOOT Agreement did not make provision for annual capacity adjustments with penalties in the payment of capacity charges, on a pro rata basis, in accordance with standard industry practice.”

There will be much disputation about the committee's report. It will be denounced by the NDC as a “political” document if course. But which agreement with anyGovernment isn't plastered all over with politics?

What is important is whether the agreement was negotiated on behalf of Ghana in goodfaith, or whether undue advantagewas taken of “dumsor” to bulldoze it through, as a means – perhaps – of garnering funds for the NDC's electoral war chest.

Most important: were the Ghana laws of causing financial loss to the state broken by the agreement?

If so, the law must be allowed to take its course.
Simple.