ANOTHER CORRUPT $1BN POWER LEASE

Ghana's current energy crisis is not about generation capacity but the capacity to buy fuel (gas or crude) to power the existing generators.
Yet, the Mahama-led National Democratic Congress government has presented another loan agreement before Parliament for the procurement of another emergency power plant, with the close to $1.00 billion deal eliciting concerns about value for money.

The emergency power plant agreement, which has been approved by President John Mahama, and submitted to Parliament for approval, has sparked controversies over what some Members of Parliament consider to be absence of value for money.
The plant, initially agreed to generate 344 megawatt, was estimated to cost US$647.7million. But, a request for additional 56 megawatt saw the figure ballooned to US$953.4million, meaning the additional 56 megawatt facility will cost the tax payer US$305.7million.

The breakdown of the project costs are: Total Power Infrastructure Cost $636.8 million; Construction Insurance Costs $3.7 million; Financial Costs $178.7 million; Development Costs $39.8 million; Operation and Maintenance Costs $23.5 million; Construction Management Costs $13.5 million; Working Capital $10.5 million; and Other Costs (including miscellaneous and Contingency) $46.9 million.

Information available to the Daily Statesman indicates that the Mines and Energy Committee of Parliament has requested the Power Ministry to produce further and better particulars on the deal.

Some members of the committee particularly want to know why the cost of 344 Megawatt Combined Cycle Gas turbine power plant, with a request for additional 56 megawatt facility, could balloon to US$953.4million, when on the open market the same facility (400megawatt) costs US$600million. They therefore want a value for money audit to be conducted on the project agreement.

Power John Jinapor was said to have failed to convince the committee members over the pricing of the facility when he appeared before them.

The emergency power project involves development, ownership, operation and management of a 400MV Combined Cycle Power Plant, to be fueled by either Liquefied Petroleum Gas or Natural Gas for a period of 25 years by Early Power Limited at Tema.

Early Power Limited has entered into an agreement with the Government of Ghana, Electricity Company of Ghana, Sage Petroleum Limited, Endeavor and EPL Holdings Cooperatie, UA, General Energy Investments and Quantum Gas Terminals for the execution of the project.

The company, which was incorporated in Ghana on October 27, 2014 to develop the emergency plant, was awarded a provisional power generation license on January 28, 2015 by the Energy Commission.

The project is expected to be financed, first, with equity from General Energy Investments, Endeavor and Sage Petroleum Limited, and, later, refinanced using the capital structure of 70: 30, being 70 per cent debt and 30 per cent equity from the open market.

According to the Agreement before Parliament, the project will be developed in two phases: "The first part of the first stage will comprise a power plant with an aggregate Contractual Capacity of 142.5MW, comprising of(sic) five (5) TM GT Units operating in simple cycle; the second part of the first stage will involve adding a TM ST Unit to the TM GT Units of Stage 1A, which will together with Stage 1A will them form a combined cycle power plant with an aggregate Contracted Capacity of 149MW; the second stage will comprise four(4) LM GT Units and one (1) LM ST Unit, which will form a combined cycle plant with an aggregate Contracted Capacity of 206MW, yielding in aggregate, an approximately 400MW Facility."