Minister of Energy, Mr. Boakye Agyarko, Tuesday, told the members of the Mines and Energy Committee probing into the controversial US$510 million Ameri Energy deal that considering the situation Ghana finds itself, it would be in the interest of the West African nation if its Power Purchase Agreement (PPA) with the Africa Middle East Resources Investment Group is abrogated.
The former British Colony, he noted, will be better off without the deal for the installation of ten (10) GE TM 2,500+ aero derivative gas turbines, operate, maintain, transfer and provision of support services that Parliament on March, 20, 2015, approved.
“It may well be that given the situation as we find it, we may be better off abrogating than let it run. We will run the numbers and make the financial decision based on that,” he noted.
He added “When we reviewed the PPA for example, if we abrogate the pool that we intend to, the cost may be about US$580million. But if we leave them to run as it is per annum, the cost of capacity charge for treating this as business as usual is US$680million for thirteen (13) years. So, in that financial calculation, one year of excess capacity cancels the payment for the liabilities of the abrogation. So, we have to go through and make these financial decisions. So, therefore, we have a situation where a project is not fully appraised in order to give the decision maker the fullest extent of information in order to make that decision. So, I cannot agree; I do not see how this project ended up with this kind of cost. I do not believe that after all is said and done, in terms of costing and rate, this project has done us well at all.”
This decision, he noted, was arrived at after considering various options on the table some of which include; both parties consenting to set aside the agreement for renegotiation; push the case for annulment based on establishment of fraud, malfeasance or any such untoward behavior; and or push for abrogation where the country could incur some liabilities.
The Energy Minister had appeared before the Mines and Energy Committee to give information regarding ongoing discussions on the Motion that the House rescinds its decision to approve the Build, Own, Operate and Transfer Agreement between the Government of the Republic of Ghana and African and Middle East Resources Investment Group Llc (Ameri Energy) for the installation of ten (10) GE TM 2,500+ aero derivative gas turbines, operate, maintain, transfer and provision of support services that Parliament on March, 20, 2015, for reasons of gross misrepresentation.
The said motion stands in the name of the MP for Adansi Asokwa and for deputy Energy Minister, K. T. Hammond.
Given further reasons as to why Ghana will be better off without the controversial deal, the Energy Minister compared the output of the power generating plants supplied by Ameri Energy and that of Sunong Asogli Plant, stressing that the later is more efficient than what the African and Middle East Resources Investment Group Llc are giving to the country.
“The most comparing aspect of the Ameri Plant and Sunong Asogli those plants coming up at the same time – Mr. Chair, Ameri plant a ten unit are all open single cycle. Sunong Asogli is a combined cycle. If you gave them the same quantities of fuel, the combined cycle completely outperforms the open cycle. For just a matter of illustrations and not scientific terms, if I gave the Ameri Plant an open cycle 5,000 barrels of crude to burn to generate power and they gave me x, for illustration purposes, if I gave the same 5,000 barrels of crude to a combined cycle, it will give me 2x. Ameri’s heat rate is 1016 BTU per kilowatt an hour. Sunong Asogli phase one is 9200 BTU per kilowatt an hour and its phase 2 is 8800BTU per kilowatt an hour.
So, the Sunong Asogli machines in terms of its efficiency were better than Ameri.
Besides, if you have a more efficient plant, then it stands to reason that it is the efficient plant that you feed first other than the inefficient plant.
Sunong Asogli phase one was a take and pay. It means if they don’t produce, they don’t get paid. That was a more efficient plant.
Ameri with the heat rate of 1016 BTU per kilowatt an hour was a take all pay with fixed monthly payment of five years.
What happened was that because of these conditions, the gas from Jubilee fields that should have gone in terms of efficiency or cost effectiveness that should have gone to Sunong Asogli was given to Ameri the more inefficient plant.
So you’ve taken your pricy gas and fed it into an open cycle plant which was less efficient. The maximum we were expecting to get out of Ameri is 230 MW, Maximum we could have got from Sunong Asogli 560 MW.