$510M AMERI DEAL STINKS

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Tuesday, December 15, 2015

Details are emerging about how the controversial Africa & Middle East Resources Investment Group (Ameri Group) deal to supply 10 gas turbines to the Government of Ghana was signed, with the country paying $290 million more than it should for the $220 million power generators.

The lid was blown at the weekend by award-winning Norwegian newspaper Verdens Gang (VG), which published that the power generating gas turbines were estimated to cost $220 on the international market, but the NDC government is contracting them for $510 million for Ghana, excluding service charges.

The newspaper’s investigative journalist is tracking a Pakistani-born Norwegian, Umar Farooq Zahoor, a fugitive who is said to have played a lead role as a director in the deal between Ameri Group and the government.

Umar Farooq is said to be the middleman between the Ghana government and the Dubai-based single purpose company.

Umar Farooq is currently being pursued by the authorities in Norway as well as Interpol for organised crime including money laundering.

Real Contract

A perusal of the Build, Own, Operate and Transfer (BOOT) agreement showed clearly that it is the government which is supposed to provide and in addition prepare the land for the installation of the 10 new General Electric TM 2500 aeroderivative gas turbines by Ameri Group.

Ameri signed the contract with the government but behind the scenes, it appeared to be playing a middleman’s role, since according to the Norwegian newspaper Ameri has a contract with a Greek firm called METKA for the supply of the turbines.

Ameri Group, according to the newspaper, is paying METKA $350 million for the turbines, compelling some experts to question where the rest of the $510 million, of which the $350 million is a part, will be going to.

Apart from the equipment price of $510 million, there is an additional annual payment of $16 million variable costs to Ameri for five years, translating into some $80 million within the five-year contract period.

Fuel For Turbines

Interestingly, fuelling of the turbines which are currently being installed in Takoradi is the responsibility of the government, per the agreement.

Ameri Group’s responsibility in the deal is to mobilise, install, commission, operate, maintain and transfer “the relevant AMERI Energy Equipment.”

Before the Norwegian newspaper’s publication last week, Dr Charles Wereko-Brobby, a former Chief Executive of Volta River Authority (VRA), had hinted that the generators should not have cost Ghana more than $220 million if they were purchased directly from General Electric, but from a third party, Ghana will be coughing about $750 million for the five years contractual period.

METKA Excitement

METKA had confirmed its involvement in the deal through a news release issued on September 17, 2015 after the deal was clinched, saying that it was partnering Ameri Group for “its first substantial project in sub-Saharan Africa”.

“METKA is pleased to announce its first substantial project in sub-Saharan Africa: Its 100% subsidiary, Power Projects Sanayi İnşaat Ticaret Limited Şirketi (Power Projects Limited), has signed a major contract to provide a fast-track EPC as well as Operation and Maintenance support for a 250MW Power Plant in Ghana,” it said, adding that “the project is a 5-year Build, Own, Operate and Transfer (BOOT) and was signed with the Government of Ghana and METKA’s partners in the deal, Ameri Group, the energy investment arm of His Royal Highness Sheikh Ahmed Bin Dalmook Al Maktoum, member of Ruling family of Dubai.”

GE Support

“The project was made possible with the active support of General Electric of the US. It consists of ten new General Electric TM2500+ mobile gas turbines together with METKA’s well-proven modular balance of plant concept already successfully implemented for forty similar fast-track units internationally.

“By the award of this new contract, METKA adds its share in this deal, which exceeds $350 million, in its current backlog and also makes significant progress on its strategic goal to build on its successful expansion within the Middle East and North Africa region, and becomes a leading player in the sub-Saharan Africa power market as well.”

Misleading Parliament

However, the deal has seriously raised eyebrows as Ghana appears to have been swindled.

Deputy Director of Africa Centre for Energy Policy (ACEP), Benjamin Boakye accused Power Minister Dr Kwabena Donkor, whom the Norwegian publication indicted for fronting what looked like a dubious transaction on behalf of Ghana, of deceiving Parliament.

He told Joy FM that emerging events showed clearly that Dr Donkor gave different figures to represent the cost of the 10 turbines.

"If you look at what was presented to Parliament and the statement that has come out today, it smacks of deception because if you told Parliament that it was going to cost us $411 million and now you are agreeing that the cost of the plant is $220 million then you did not help Parliament to even do due diligence. You misrepresented the facts before Parliament," he stated.

He also accused the government of using the middleman -Ameri Group- when it could have gone directly to buy the turbines from either the GE or METKA at a far reduced rate. According to him, METKA, the company which owns the turbines, is being paid an amount of $350 million which means the extra $160 million has been paid to Ameri Group just for playing a third party role.

Minister’s Reaction

Dr Kwabena Donkor, after an initial comment, officially issued a statement seeking to set the records straight on issues of cost of the plant and due diligence on the Ameri Group.

As if the Ameri deal was free of charge, Kwabena Donkor claimed that as a BOT, the NDC government “has not made any payments to Ameri and will not be making any payments for the cost of the equipment,” and that “per the agreement with Ameri, the Government of Ghana through the Volta River Authority (VRA) will only make payments to Ameri for power produced and supplied to the VRA just like any other Independent Power Producer (IPP).”

He said Ghana is required to provide “a standby Letter of Credit (LC) for an amount of $51 million, which LC has been raised.”

“It must also be explained that the quoted price of $220 million in the Norwegian story for outright purchase of similar turbines 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.”

 Dr Kwabena Donkor further said that the government has not entered into any agreement with Umar Farooq Zahoor but rather with Ameri Group where he once worked.

He said the Bank of Ghana which reportedly issued the LC, as well as JP Morgan, the ministry, AG’s Department and Parliament all conducted their own due diligence before giving a go-ahead for the project.

But in response to the minister’s claims that the Government of Ghana had not made ANY PAYMENTS to Ameri and will not be making any payments for the cost of the equipment, Professor Stephen Kwaku Asare, a US-based Ghanaian law teacher, observed that “this statement is facially absurd and misleading. I can now say that the statement is false and the minister simply lied.”

Prof Asare explained that Section 10 of the contract stipulates: "Required Payments

(a) government is required to make monthly payments in consideration of installation, operation and maintenance

(b) the aggregate payment is equal to the contract price, which is set forth in Annex G (I am yet to get the annexures).

(c) variable costs to be paid will equal to number of fired hours and amount stipulated in Annex G

(d) the required payments for the AMERI ENERGY equipment will begin to accrue on the earlier of...”