DUBAI POWER DEAL STINKS

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Thursday, March 5, 2015

It has emerged that the NDC government will be spending a whopping $700million for a total of 250megawatts of emergency power from a Dubai based company called Ameri Energy Group.

Interestingly, the government can make an outright purchase of the same power plant between $180-$220 million according to energy policy analysis group Africa Centre for Energy Policy (ACEP).

The Mahama-led government rather wants to spend $700million to rent the emergency power unit in a period of five years from Ameri Energy Group to solve the country’s protracted power crisis.

Dr. Mohammed Amin Adam, Executive Director of ECEP at a news conference in Accra on Monday punched holes into some of the agreements reached by the government and foreign companies that are seeking to help the government solve the power crisis.

He said the Dubai deal “is a lease based on build, operate, own and transfer (BOOT) with a total of 250MW of emergency power. The units consist of 10 set of GE TM 2500 power plants each consisting of 25 MW.”

According to ACEP, the units will be leased to Ghana at about $120million yearly in addition to $16 million for other contingencies that could shoot the cost up to $138 million but excluding cost of fuel.

“If we have $138million to pay for one-year lease, this could buy about 6 or 7 of the unit outright in Ghana,” the ACEP boss said.

He insisted that “it does not make economic sense to rent the plants for $700million for five years before taking ownership when we could have bought them outright for $220million.”

He said under the deal, GRIDCo is supposed to bear the cost of transmission interconnection, which had not been budgeted for.

Additionally, the ACEP boss said that the plant required 85MM scf/day of fuel and it was to be sourced from the Atuabo Gas plant adding “on this basis, the gas meant for the T1 and T2 plants is to be displaced and run on the new 250MW APR plant. The gas is estimated to cost $20-25million.”

“The implication of the gas arrangement is that crude oil will have to be procured to run the T1 and T2. At current crude oil price of $50bbl, the monthly cost is $25-30 million but the total consumption of T1 and T2 at full operation is approximately 20,000bbl/day.”

Dr. Adam said “this makes it difficult to run T1 and T2 given the history of VRA’s financial challenges.”