Government To Save $72 Million From OCTP Gas Price Renegotiation
Government as part of efforts to reduce the cost of energy to Ghanaians and to create an enabling environment for business to thrive, has ensured the reduction of the OCTP gas price resulting in savings of at least US $ 72 million every year for consumers.
This comes on the back of negotiations between the Government represented by the Ministry of Energy, Ministry of Finance and GNPC on one hand, and the OCTP partners (Eni Ghana and Vitol Upstream) on the other hand, to revise the gas price.
It will be recalled that the OCTP gas price was negotiated in 2015 as part of the Gas Sales Agreement signed between GNPC and the OCTP partners.
The negotiated headline gas price at the time was US$ 9.8 MMBtu to be escalated annually by a composite index that tracks movements in the United States consumer price index and Henry Hub gas price.
MOU and Letter Agreement
In subsequent engagements with the OCTP partners, an agreement was reached in a Memorandum of Understanding (MoU) dated 15th January 2019 to rearrange the funding of the Takoradi – Tema Interconnection Project (TTIP), such that it is treated as a loan borne by GNPC (on behalf of the state) instead of it being a development cost to be recovered through the gas price.
GNPC is to pay the loan using credit accumulations on the Sankofa gas payment since first gas. The TTIP was completed in July 2020 at a total cost of US$ 126.4 million.
Following further engagements and negotiations between GNPC and the Partners to exclude the TTIP cost from the delivered gas price amongst other measures, the parties agreed to reduce the gas price by US$2.26/MMBtu. The MoU was thus, signed to outline the broad terms and conditions for the price reduction, as well as the implementation plan.
Subsequently, the parties negotiated a Letter Agreement – as a sequel to the MoU to implement the reduction. This letter agreement was signed by the parties in October 2021.
Gas Price Reduction and Savings
Owing to the execution of this agreement, there is an immediate reduction of OCTP gas price. Over the life of the project, the estimated savings to the nation would amount to about US$1.34 billion.
Significance for the Ghanaian Economy
The reduction of the OCTP gas price which yields the above savings is a major achievement by the government of Ghana and consistent with government’s overarching policy to reduce cost of electricity for businesses and individual consumers. Per the savings, lower electricity tariffs are being maintained, leading to decreased cost of doing business. The move will also contribute positively to the industrialisation drive of President Akufo Addo’s government with attendant benefits such as economic growth, employment creation and a boost in government revenue.
The effort has been applauded by power producers, CSOs and other stakeholders in the energy sector.
THE AMERI DEAL: THE BIGGEST SWINDLE OF GHANAIANS BY JOHN MAHAMA
The $ 510 million 250MW AMERI signed by the NDC government in 2015 will go down as the biggest swindle of Ghanaians by the man who unsurprisingly seeks another bite at Ghana’s Presidential cherry. Indeed, from all records available, it can be stated without equivocation that Metka, the subcontractor of Ameri, financed and executed the project for the total sum of 360 million US Dollars.
The deal was clearly over priced by $150 million
It can be recalled that total installed generation capacity as of 2012 was 2,200MW. This was increased to about 2,800MW in 2014 when Bui Power was commissioned. By 2015, generation was increased to 3,700MW; whereas peak demand was 1,800MW in 2012 and rose to about 1,900MW in 2015. Clearly, there was sufficient enough generation during the period 2012 to 2015 to meet the present-day demand needs of the country.
The lack of fuel (gas and it’s alternative-LCO) and the lack of finances to purchase some thereof, was the biggest challenge, yet, the NDC government because of reasons known to them thought the best way out of Ghana’s reeling power challenges was the signing of arbitrary Power Purchase Agreements ostensibly to add more capacity.
Is it not also contradictory enough that the same administration on record to have said on so many occasions that DUMSOR was due to a damage to the West African Gas Pipeline which supplies gas from Nigeria to power plants in the East and West of Ghana resorted to this route?
The AMERI Swindle
Ghana needed ten plants to supply 256 MW. The plants at the time were sold on the open market for $22 million each for the version that supplies 25MW. Ghana needed 256 MW and obviously wanted a financing option we could afford. The NDC government went to a company called AMERI to put together a turnkey project that will help us procure the solution.
Ameri also went to a Greek company called Metka which bought the equipment from General Electric. Metka also brought in an affiliate called PPL that supplied the components and engineering architecture used to integrate the plants into a single whole.
AMERI then signed a Build, Own, Operate and Transfer (BOOT) agreement with Ghana where Ghana would pay for the plants over a period of 5 years in monthly instalments of about $8.5 million for the $ 510 million deal.
Ghana per the agreement was also to pay for the fuel including operational and other servicing costs. The situation can be likened to a Work and Pay Taxi structure.
The nature of this transaction and the inability of the NDC government to account for the $150 million was questioned by CSOs and well-meaning Ghanaians because officials of the government would certainly not handle their private entities like this. Ghana was clearly shortchanged.
Indeed, a Norwegian newspaper Verdens Gang, published a news article suggesting that some government officials in the John Mahama administration paid a whopping $150 million to a middleman for little or no job done
The NPP Intervention
The Akufo-Addo Addo government’s decision to review all PPAs was the best thing ever to happen to Ghana. President Akufo-Addo’s desire to see the deal renegotiated favourably in the interest of Ghana even led to some ‘casualties’. After careful negotiations, AMERI agreed to have interests accumulated on the $90m outstanding debt from February 2017 through to July 2018 waived, while an agreement was reached with same on a payment schedule for the $90 million in the wake of government’s liquidity challenges in the Power sector.
The NPP government also got AMERI to agree to charge $6.37 million per month instead of the $8.5 million per month in the existing “BOOT Agreement” for the remaining $255 million covering the two and a half years of the BOOT Agreement, leading to a trim of $63.75 million which was to be paid over an extended year to the existing BOOT Agreement at an unconditional discount of $7 million, spread over a 12-month period, and further discounted by 5% on condition of prompt payment by Government of Ghana.
This extended the initial 5-year duration by a year in simple terms. The NPP government further achieved full waiver of the two and a half year’s $0.005kWh Variable charge due AMERI, saving Ghana an amount of $41.5 million ― $8.3 million for 2018, and $16.6 million for 2019 and 2020 respectively. This is leadership that thinks about the next generation!
The NDC should be reminded that an evaluation of the amount of money (in excess of $900 million) that the Government has had to spend on paying capacity charges for power we did not need from 2017 till date, could have been spent on building more schools, hospitals, roads etc. The Akufo-Addo government decided not to cancel the AMERI deal outrightly because of the inevitable judgement debt consequences it would have posed.
Today, the NPP government has taken full ownership of the AMERI Plant after completing the terms of the most favourably renegotiated BOOT agreement under the circumstances, and will move it to Anwomaso in the Ashanti region to stabilize power network in the middle belt of Ghana. The NPP’s conduct on AMERI since assuming office till date is one that can be described as visionary not the reckless act, clearly hinged on personal considerations by the handlers of the Ghanaian purse between 2013 and 2017.
Conclusion
John Jinapor may want to hail his mentor John Mahama, may be on other themes but certainly not in the energy sector and not on AMERI. The AMERI deal will go down as the biggest scam ever visited on the good people of Ghana and an indelible blot on John Mahama’s integrity. The AMERI syndicate still lives. John Jinapor must remember, one may not be dealt with by law now, but to be imprisoned by your own conscience is enough.
This same John Mahama in July 2017 was reported to have travelled to Namibia together with two AMERI representatives to discuss energy opportunities. This report has not been denied anywhere on these streets.
All Hail John Mahama!!!!!!