Dr. Kwabena Donkor Responds To Bright Simons On AMERI Allegations

RESPONSE
TO BRIGHT SIMONS OF IMANI
Mr. Bright Simons Fact-Checking write up claims I was recently on the Good Evening Ghana Show.
Response: I was on Good Evening Ghana yesterday, the 20th day of April, 2017.
Mr. Bright Simons claims He, however, refused an on-set debate with Anti-Ameri activists.
Response: This is purely the imagination of Mr. Bright Simons since I was never told any other person
was going to be on the show; let alone refusing to be on the show with Anti-Ameri activists whoever
they are. I had no idea that IMANI had become an anti-Ameri organization as is being implied by Mr.
Bright Simons.
Let me now take the chronology of FACTS as claimed by Mr. Bright Simons.
1. He claims that I finally admitted that the catalog price of the ten TM2500 is $22million each. This
claim is bogus and is not worth the paper on which it is written. In my letter submitted to the
Chairman of the Parliamentary Select Committee on Mines and Energy on 17th March 2015,
attached here as Appendix 1, the Committee was furnished with the breakdown of the
Installation of 10 GETM2500 Units in Aboadze Purchase Option Table 3. Under Procurement
is Supply of TM2500+. The quantity stated there is 10 units at $22,000,00 and a total price of
$220,000,000. I leave readers to make their own judgement.
NON FACT
Under Non Facts, Mr. Bright Simons claims the TM25000+ not a gas turbine. May I kindly refer
readers to the General Electric Website (https://powergen.gepower.com). The formal name here is
TM2500: Mobile Gas Turbine & Power Plant. Except Mr. Bright Simons is the manufacturer of the
equipment, he cannot re-engineer the name given by the manufacturer. Mr. Bright Simons again
states that the plant can be set up in three days. And yet on the said website, GE claims installation
and commissioning can be done in as few as eleven days. Readers should note that setting the
TM2500 up as a single stand-alone plant is easier than integrating it into a national grid system. A
substation with appropriate transformers is set up to integrate into the national grid.
2. I am very surprised Bright Simons cannot distinguish between LM2500 and TM2500. They are
very different equipment types. It would have saved us a lot of unnecessary aggravation if Mr.
Simons had spoken to VRA or any power engineering firm or the local office of GE in Ghana.
3. Mr. Bright Simons again claims I believe it costs $118million to procure the balance of plant.
This is ridiculous to say the least. On page 5 of Appendix 1 attached, the total amount assigned
to balance of plant is $27, 084,000. This is what was submitted to Parliament. In addition to that
figure, a provision of $84m is made for the five year period as Long Term Service Agreement
(LTSA) on the same page. The LTSA is a regular feature in power operations. This in addition to a
$6million dollar insurance provision, brings the total projected cost of the plant (if we had the
money) to $338,584,000.00. This can also be found in the Library of Parliament.
4. Mr. Simons claims that an additional $83m variable cost should be added to the S510m to get to
a total of $593m as the total cost of ownership to Ghana. This is not factual. On page 3 Table 1
of attached appendix addressed to the Chairman of the Parliamentary Select Committee on
Mines and Energy, an annual ceiling of $9,263,700 is already added to the BOOT option to arrive
at the $510m. Any such further addition would amount to double counting. It is important to
note that the variable cost element in the tariff build-up is only the upper ceiling. Actual claim is
vetted by VRA and PURC. For example, the claim by AMERI for variable cost for January 2017
was $89,680.00 while that of February 2017 was $574,495.00. This compares to the upper
ceiling of $771,975 submitted to Parliament. Mr. Simons also claims an unlevered IRR 10.4% is
the average for power projects. If only he had contacted PURC. The ROI approved for power
plants by the Regulator is within the range of 15-18 percent.
5. Mr. Simons questions my claim (and confirmed by PWC Value for Money Audit) that AMERIs
tariff is the cheapest of all thermal plants levelized over 20 years. The basis of his irritation is
that Ghana provides gas to AMERI. If he had the humility of talking to the PURC, he would have
known that the price of fuel is pass through for all power plants in Ghana. In other words, fuel
is treated the same for all power plants and is cost neutral when comparing cost of generation
between power plants in Ghana. And for his information, VRA supplies gas to TICO, SAPP, CENIT
and AMERI. VRA is the Contracting Party on behalf of the Government of Ghana for West Africa
Gas under the WAGP Agreement. VRA then signs Gas Sales Agreement with the Generating
Companies. This is therefore not peculiar to AMERI as Mr. Bright Simons would want Ghanaians
to believe. Again he keeps confusing TM2500 with LM2500. AMERI supplied TM2500+ and this
equipment does not use crude oil as he wants the world to believe. The equipment operates
on gas or distillate liquid fuel such propane, diesel etc. without major hardware modification
(https:/powergen.gepower.com/products/aeroderivative-gas-turbine-family.html). He can also
refer to the document MID-TD-0000-1 of September 2009 by GE Energy. It covers Process
Specification: Fuel Gases for Combustion In AeroDerivative Gas Turbines. This document is
attached to Memorandum and Agreement sent to Parliament by the Ministry of Power. The
tariff approval by PURC already includes the cost of fuel adjusted for all thermal plants at the
same price every month based on actual indexed prices. There is no additional element of fuel
when comparing plant to plant. A little practical experience or a willingness to consult industry
players helps.
6. Mr. Simons wonders whether the AMERI transaction is a BOOT. I am not sure Mr. Simons
understands how BOOT projects work. Other that he would not talk about depreciated value.
The equipment, and he can confer with VRA and other power engineers including those at PURC
has a minimum useful life of 20 years. Under the Agreement approved by Parliament under
Clause 26, . the Parties shall appoint an independent engineer to conduct a condition survey
of the AMERI ENERGY Equipment has been maintained in accordance with the Original
Equipment Manufacturer (OEM) standards. In addition, the independent engineer shall deliver
its opinion as to whether or not the AMERI ENERGY Equipment or any part therefore is in good
working condition consistent with the number of operating hours .. In short AMERI ENERGY
under the contract has an obligation to surrender to VRA (Ghana) a plant in good working
condition. This is captured on page 40 of the contract. I am sincerely amazed that Mr. Bright
Simons would introduce depreciation in a BOOT. I wonder his appreciation of BOOT.
7. Mr. Simons seems not to understand the fact that we are not paying a pesewa upfront for this
plant. If we had the money, Ghana would have purchased the plant outright. It is surprising that
MR. Simons thinks you would pay the same price for a car if bought on cash basis from the
showroom as you would pay if you buy on hire purchase or work and pay. This position is so
flawed it is unbelievable.
8. Mr. Bright Simons states The fixed charge of more than 14.5 US cents per Kwh in the contract is
what is effectively acting as the capacity charge in this contract... I would want to believe that it
is a typo. If not, for his education, I would want to state that the total approved tariff of 14.5918
cents per kw/h for Years 1 5 and 10.4149 cents per kw/h for Years 6-20 is the Applicable
Tariff(11.46 cents per kw/h levelised) and not the Fix Charge or Capacity Charge. The Applicable
Tariff includes fuel cost. AMERIs approved capacity tariff for the first five years is 5.510cents per
kw/h and while the levelised over the 20 years is 2.377cents per kw/h thus making AMERI the
lowest levelised in the country. I sincerely hope his defense would be a typo, if not, plain
political mischief cannot be ruled out. May I kindly recommend the PWC Value for Money Audit
on AMERI for his reading?
9. What Mr. Simons refuses to appreciate is the role of ASKA and Karpower in addressing our fuel
security challenge. ASKA was given a five contract based on the need for diversified fuel source
in the Tema corridor. The inability of the WAGP to supply gas in the Tema corridor called for
equipment type that can operate on cheaper fuel and in the case of AKSA Heavy Fuel Oil (HFO).
The plant is adding about 160MW to the national grid today even though it is undergoing
commissioning. The current very low cost of HFO makes Karpower and AKSA far more
competitive than would have other been. The ability of Karpower and AKSA to generate in the
Tema corridor on the back of HFO provides grid stability for GRIDCO, thus making savings to
GRIDCO as well. It is important to understand that this is a short term agreement to help us
bridge the load shedding crisis.
10. Mr. Bright Simons takes the posture of speaking for the Government. If that is the position, he
should make it clear. He wonders why I repudiate the allegation of fraud. Is he continuing from
where his friend Mr. Hughes left off? He does not understand law better than Hon. Dr. Ayeni
(former DAG) who took part in the negotiation process.
11. It amazes me that a contract Mr. Bright Simons claims is inflated still gives Ghana the cheapest
tariff of any thermal plant levelised at $US0.1146 per kw/h. When an emergency plant gives the
country a lower tariff than plants constructed under non-emergency conditions, then there is
great good in the emergency plant! Mr. Bright Simons today talks about Energy Sector Debts
inching towards $3bn and effuses sympathy for the difficulty situation facing the government in
this critical area of national life. It has taken a change of government for Mr. Bright Simons
and his ilk to appreciate energy sector debts.

I do not intend elongating this discussion but I leave the good people of Ghana to make up their own
minds devoid of the propaganda of the likes of Mr. Bright Simons who have shown clear partisanship.
But it is important to bring to the notice of Ghanaians why the BOOT, in the absence of funds to
construct plants on cash basis, is a very reasonable option for Ghana. If you model the various Capital
Recovery/Capacity approvals for our thermal power plants, generating at the same 230MW and the
same hours per year at an availability of 92% and generating energy at 1,854GWh hours per year, the
country over a five year period would pay the following amounts for four selected plants:
1. AMERI ENERGY US$510.67M

2. CENIT US$372.58M
3. KKARPOWER US$672.86M
4. ASKA US$653.40M
As indicated above, and this is symptomatic of all Independent Power Plants (IPPs)in Ghana, except in
the case of AMERI, the Plants do not revert to the State after the five year period. It is only in the case of
AMERI that we get to own the Plant after five years. I leave Ghanaians to judge which is the better
option for Ghana.
Please find attached the following as appendices:
a). The Letter of the Ministry of Power dated 17th March 2015 addressed to the Chairman of the
Parliamentary Select Committee on Mines and Energy
b). The PWC Value For Money Audit Report on AMERI ENERGY
c). The Calculation of the Capital Capacity/Capital Recovery Tariff for selected Power Plants

Transaction Services
Office of the President
Value for Money (VFM) Review
of the AMERI Project
Strictly private
and confidential
Final Report
February 2016
RESPONSE TO BRIGHT SIMONS OF IMANI
Mr. Bright Simons Fact-Checking write up claims I was recently on the Good Evening Ghana Show.
Response: I was on Good Evening Ghana yesterday, the 20th day of April, 2017.
Mr. Bright Simons claims He, however, refused an on-set debate with Anti-Ameri activists.
Response: This is purely the imagination of Mr. Bright Simons since I was never told any other person
was going to be on the show; let alone refusing to be on the show with Anti-Ameri activists whoever
they are. I had no idea that IMANI had become an anti-Ameri organization as is being implied by Mr.
Bright Simons.
Let me now take the chronology of FACTS as claimed by Mr. Bright Simons.
1. He claims that I finally admitted that the catalog price of the ten TM2500 is $22million each. This
claim is bogus and is not worth the paper on which it is written. In my letter submitted to the
Chairman of the Parliamentary Select Committee on Mines and Energy on 17th March 2015,
attached here as Appendix 1, the Committee was furnished with the breakdown of the
Installation of 10 GETM2500 Units in Aboadze Purchase Option Table 3. Under Procurement
is Supply of TM2500+. The quantity stated there is 10 units at $22,000,00 and a total price of
$220,000,000. I leave readers to make their own judgement.
NON FACT
Under Non Facts, Mr. Bright Simons claims the TM25000+ not a gas turbine. May I kindly refer
readers to the General Electric Website (https://powergen.gepower.com). The formal name here is
TM2500: Mobile Gas Turbine & Power Plant. Except Mr. Bright Simons is the manufacturer of the
equipment, he cannot re-engineer the name given by the manufacturer. Mr. Bright Simons again
states that the plant can be set up in three days. And yet on the said website, GE claims installation
and commissioning can be done in as few as eleven days. Readers should note that setting the
TM2500 up as a single stand-alone plant is easier than integrating it into a national grid system. A
substation with appropriate transformers is set up to integrate into the national grid.
2. I am very surprised Bright Simons cannot distinguish between LM2500 and TM2500. They are
very different equipment types. It would have saved us a lot of unnecessary aggravation if Mr.
Simons had spoken to VRA or any power engineering firm or the local office of GE in Ghana.
3. Mr. Bright Simons again claims I believe it costs $118million to procure the balance of plant.
This is ridiculous to say the least. On page 5 of Appendix 1 attached, the total amount assigned
to balance of plant is $27, 084,000. This is what was submitted to Parliament. In addition to that
figure, a provision of $84m is made for the five year period as Long Term Service Agreement
(LTSA) on the same page. The LTSA is a regular feature in power operations. This in addition to a
$6million dollar insurance provision, brings the total projected cost of the plant (if we had the
money) to $338,584,000.00. This can also be found in the Library of Parliament.
4. Mr. Simons claims that an additional $83m variable cost should be added to the S510m to get to
a total of $593m as the total cost of ownership to Ghana. This is not factual. On page 3 Table 1
of attached appendix addressed to the Chairman of the Parliamentary Select Committee on
Mines and Energy, an annual ceiling of $9,263,700 is already added to the BOOT option to arrive
at the $510m. Any such further addition would amount to double counting. It is important to
note that the variable cost element in the tariff build-up is only the upper ceiling. Actual claim is
vetted by VRA and PURC. For example, the claim by AMERI for variable cost for January 2017
was $89,680.00 while that of February 2017 was $574,495.00. This compares to the upper
ceiling of $771,975 submitted to Parliament. Mr. Simons also claims an unlevered IRR 10.4% is
the average for power projects. If only he had contacted PURC. The ROI approved for power
plants by the Regulator is within the range of 15-18 percent.
5. Mr. Simons questions my claim (and confirmed by PWC Value for Money Audit) that AMERIs
tariff is the cheapest of all thermal plants levelized over 20 years. The basis of his irritation is
that Ghana provides gas to AMERI. If he had the humility of talking to the PURC, he would have
known that the price of fuel is pass through for all power plants in Ghana. In other words, fuel
is treated the same for all power plants and is cost neutral when comparing cost of generation
between power plants in Ghana. And for his information, VRA supplies gas to TICO, SAPP, CENIT
and AMERI. VRA is the Contracting Party on behalf of the Government of Ghana for West Africa
Gas under the WAGP Agreement. VRA then signs Gas Sales Agreement with the Generating
Companies. This is therefore not peculiar to AMERI as Mr. Bright Simons would want Ghanaians
to believe. Again he keeps confusing TM2500 with LM2500. AMERI supplied TM2500+ and this
equipment does not use crude oil as he wants the world to believe. The equipment operates
on gas or distillate liquid fuel such propane, diesel etc. without major hardware modification
(https:/powergen.gepower.com/products/aeroderivative-gas-turbine-family.html). He can also
refer to the document MID-TD-0000-1 of September 2009 by GE Energy. It covers Process
Specification: Fuel Gases for Combustion In AeroDerivative Gas Turbines. This document is
attached to Memorandum and Agreement sent to Parliament by the Ministry of Power. The
tariff approval by PURC already includes the cost of fuel adjusted for all thermal plants at the
same price every month based on actual indexed prices. There is no additional element of fuel
when comparing plant to plant. A little practical experience or a willingness to consult industry
players helps.
6. Mr. Simons wonders whether the AMERI transaction is a BOOT. I am not sure Mr. Simons
understands how BOOT projects work. Other that he would not talk about depreciated value.
The equipment, and he can confer with VRA and other power engineers including those at PURC
has a minimum useful life of 20 years. Under the Agreement approved by Parliament under
Clause 26, . the Parties shall appoint an independent engineer to conduct a condition survey
of the AMERI ENERGY Equipment has been maintained in accordance with the Original
Equipment Manufacturer (OEM) standards. In addition, the independent engineer shall deliver
its opinion as to whether or not the AMERI ENERGY Equipment or any part therefore is in good
working condition consistent with the number of operating hours .. In short AMERI ENERGY
under the contract has an obligation to surrender to VRA (Ghana) a plant in good working
condition. This is captured on page 40 of the contract. I am sincerely amazed that Mr. Bright
Simons would introduce depreciation in a BOOT. I wonder his appreciation of BOOT.
7. Mr. Simons seems not to understand the fact that we are not paying a pesewa upfront for this
plant. If we had the money, Ghana would have purchased the plant outright. It is surprising that
MR. Simons thinks you would pay the same price for a car if bought on cash basis from the
showroom as you would pay if you buy on hire purchase or work and pay. This position is so
flawed it is unbelievable.
8. Mr. Bright Simons states The fixed charge of more than 14.5 US cents per Kwh in the contract is
what is effectively acting as the capacity charge in this contract... I would want to believe that it
is a typo. If not, for his education, I would want to state that the total approved tariff of 14.5918
cents per kw/h for Years 1 5 and 10.4149 cents per kw/h for Years 6-20 is the Applicable
Tariff(11.46 cents per kw/h levelised) and not the Fix Charge or Capacity Charge. The Applicable
Tariff includes fuel cost. AMERIs approved capacity tariff for the first five years is 5.510cents per
kw/h and while the levelised over the 20 years is 2.377cents per kw/h thus making AMERI the
lowest levelised in the country. I sincerely hope his defense would be a typo, if not, plain
political mischief cannot be ruled out. May I kindly recommend the PWC Value for Money Audit
on AMERI for his reading?
9. What Mr. Simons refuses to appreciate is the role of ASKA and Karpower in addressing our fuel
security challenge. ASKA was given a five contract based on the need for diversified fuel source
in the Tema corridor. The inability of the WAGP to supply gas in the Tema corridor called for
equipment type that can operate on cheaper fuel and in the case of AKSA Heavy Fuel Oil (HFO).
The plant is adding about 160MW to the national grid today even though it is undergoing
commissioning. The current very low cost of HFO makes Karpower and AKSA far more
competitive than would have other been. The ability of Karpower and AKSA to generate in the
Tema corridor on the back of HFO provides grid stability for GRIDCO, thus making savings to
GRIDCO as well. It is important to understand that this is a short term agreement to help us
bridge the load shedding crisis.
10. Mr. Bright Simons takes the posture of speaking for the Government. If that is the position, he
should make it clear. He wonders why I repudiate the allegation of fraud. Is he continuing from
where his friend Mr. Hughes left off? He does not understand law better than Hon. Dr. Ayeni
(former DAG) who took part in the negotiation process.
11. It amazes me that a contract Mr. Bright Simons claims is inflated still gives Ghana the cheapest
tariff of any thermal plant levelised at $US0.1146 per kw/h. When an emergency plant gives the
country a lower tariff than plants constructed under non-emergency conditions, then there is
great good in the emergency plant! Mr. Bright Simons today talks about Energy Sector Debts
inching towards $3bn and effuses sympathy for the difficulty situation facing the government in
this critical area of national life. It has taken a change of government for Mr. Bright Simons
and his ilk to appreciate energy sector debts.

I do not intend elongating this discussion but I leave the good people of Ghana to make up their own
minds devoid of the propaganda of the likes of Mr. Bright Simons who have shown clear partisanship.
But it is important to bring to the notice of Ghanaians why the BOOT, in the absence of funds to
construct plants on cash basis, is a very reasonable option for Ghana. If you model the various Capital
Recovery/Capacity approvals for our thermal power plants, generating at the same 230MW and the
same hours per year at an availability of 92% and generating energy at 1,854GWh hours per year, the
country over a five year period would pay the following amounts for four selected plants:
1. AMERI ENERGY US$510.67M

2. CENIT US$372.58M
3. KKARPOWER US$672.86M
4. ASKA US$653.40M
As indicated above, and this is symptomatic of all Independent Power Plants (IPPs)in Ghana, except in
the case of AMERI, the Plants do not revert to the State after the five year period. It is only in the case of
AMERI that we get to own the Plant after five years. I leave Ghanaians to judge which is the better
option for Ghana.
Please find attached the following as appendices:
a). The Letter of the Ministry of Power dated 17th March 2015 addressed to the Chairman of the
Parliamentary Select Committee on Mines and Energy
b). The PWC Value For Money Audit Report on AMERI ENERGY
c). The Calculation of the Capital Capacity/Capital Recovery Tariff for selected Power Plants

Contents
Summary of key issues Introduction and Background Our Scope of Work Our Approach and Methodology
Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Important notice This document has been prepared for the Office of the President in accordance with the terms of our
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Office of the President Confidential Information for the sole benefit and use of PwCs Client. February 2016
PwC Final Report 2
Contents
Hon. Julius Debrah
Chief of Staff
Office of the President
Flagstaff House
Accra, Ghana
12 February 2016
Dear Sir,
Subject: Value For Money (VFM) Review of the Power Purchase Agreement (PPA)
between Government of Ghana (GoG or The Government) and Africa & Middle East
Resource Investment Group LLC, Dubai (AMERI)
Vish Ashiagbor We are pleased to submit the final report (the Report) in accordance with our engagement with the
Engagement Leader Office of the President of the Republic of Ghana (The Office of the President or you) in connection
T:+233 (0)302 761 500 with a VFM review of the PPA between GoG and AMERI (the Agreement or AMERI Agreement).
M:+233 (0) 20 815 1534
This Report may not be disclosed in whole or in part to any other party without the prior written
vish.ashiagbor@gh.pwc.com
consent of PricewaterhouseCoopers (Ghana) Limited (PwC or PwC Ghana). PwC Ghana accepts no
responsibility to any party, other than the above mentioned, into whose hands this Report (or any part
of it) may come, with or without PwC Ghanas consent.
Yaw Appiah-Lartey
Senior Manager If you require any clarification or further information, please do not hesitate to contact the
T:+233 (0)302 761 500 undersigned on +233 (0) 302 761 500 or at vish.ashiagbor@gh.pwc.com.
M:+233 (0) 24 415 8377
Yours faithfully,
yaw.appiah-lartey@gh.pwc.com
For and on behalf of PricewaterhouseCoopers (Ghana) Limited
Vish Ashiagbor
Director
PricewaterhouseCoopers (Ghana) Limited
No. 12 Airport City, UNA Home, 3rd Floor,
PMB CT 42, Cantonment, Accra, Ghana
T: +233 (0) 302 761 500
PricewaterhouseCoopers (Ghana) Limited is a limited liability company registered in Ghana with registered number 77658. The
F: +233 (0) 302 761 544 registered office of PricewaterhouseCoopers (Ghana) Limited is No. 12 Airport City Una Home 3rd Floor, Accra, Ghana
PwC Final Report 3
Contents
Contents Transmittal letter
1 Summary of key issues
3
5
2 Introduction and Background 16
3 Our Scope of Work 18
4 Our Approach and Methodology 20
5 Overview of the Transaction 23
5.1 Key terms of the Agreement 24
5.2 Tendering and approval process review 28
5.3 Risk Allocation 30
6 Benchmarking analysis 39
6.1 Payment mechanism (Tariff analysis) 40
6.2 Project cost analysis 42
6.3 Concession arrangement 45
6.4 Security and termination 47
6.5 Operating costs (fuel arrangement) 50
7 Financial assessment 52
7.1 Investment appraisal 53
8 Appendices 58
8.1 Letter from the Office of the President 59
8.2 Glossary 61
PwC Final Report 4
Contents
1 Summary of key issues Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Summary of key issues
PwC Final Report 5
Contents
Our review of the composite generation tariff of 7 comparable plants in Ghana indicates that
At a glance (1/10) the approved composite tariff for AMERI is the 4th lowest. In addition, the levelised tariff for
NB: The comparable companies were selected AMERI is the lowest compared to the tariff for the 7 comparable plants.
based on the type of fuel used ie natural gas
or light crude oil to allow comparison with
the AMERI Project.
Composite tariff* (cents/kWh), 2015 2017:
01 AMERI vs. Selected comparable plants in Ghana
Breakdown of approved composite tariff*: AMERI vs selected plants in
Ghana
We compared the composite generation tariff for the AMERI 20 20
18.20
Project to the PURC approved composite tariff for 2015 to 18 18
2017, for 10 selected plants in Ghana. However, whilst we 15.82
16 15.30 16
have composite tariff data for 7 of the selected plants, we 14.59 14.25
13.83
obtained breakdowns of the composite tariff for only 6 of the 14 14
12.21
7 plants. 12 11.46 12
USc/kWh
USc/kWh
When compared to the 7 comparable plants in Ghana, the 14.25
10.07
10 11.77 9.08 10
composite generation tariff for the AMERI Project of about 9.82
10.74
USc14.59kWh is lower than the average approved composite 8 8.56 8
9.08
tariff for the 7 plants at USc14.94kWh. 6 6
When ranked together with the approved composite tariffs
4 4
for the 7 comparable plants, the approved composite tariff for 5.51
5.23 4.44
the AMERI Project is the 4th lowest among the comparable 2 3.95 4.05
3.09 3.65
2.38
2
plants and the lowest when levelised over the 20-year period. - -
The levelised tariff** for AMERI is the lowest compared to Trojan Cenit Sunon AMERI Sunon Tema Takoradi AMERI
Power Energy Asogli Asogli Thermal 2 International (Levelised)
the tariff for the 7 comparable plants. Limited Limited Power Plant Power Plant Power Plant Power
Projects of this nature are typically for 15 -20 years I (SAPP1) 2 (SAPP2) (TT2PP) Company
(TICO)
**Levelised tariff: The AMERI contract is for a period of 20 years but
the capital recovery charge is applicable for the first 5 years after which Capacity charge Energy charge Composite
it drops to zero (0). To facilitate comparison with other projects with
Source: ECG, MoP and PwC analysis
longer tenure for capital recovery, we have computed the comparable
capital recovery charge for AMERI over the 20-year contract period.
* Composite tariff is the sum of capital recovery, fixed O&M, fuel recovery and non-
fuel variable O&M charges
PwC Final Report 6
Contents
Our review of capacity tariff data for selected plants in Ghana suggests that, when compared
At a glance (2/10) with 9 thermal power plants, the approved capacity tariff for the AMERI Project of about
NB: The comparable companies were selected USc5.5/kwh is the highest compared with the 9 other comparable plants in Ghana. However,
based on the type of fuel used ie natural gas the levelised capacity charge is the lowest when compared to the capacity charges for the other
or light crude oil to allow comparison with 9 comparable plants.
the AMERI Project.
Capacity tariff (cents/kWh), ), 2015 2017: AMERI vs.
02 Selected comparable plants in Ghana
We compared the project data for the AMERI Project to 10 selected **Levelised tariff: The AMERI contract is for a period of 20 years
plants in Ghana. However, we have been able to obtain capacity but the capital recovery charge is applicable for the first 5 years after
tariff data for 9 out of the 10 comparable plants. which it drops to zero (0). To facilitate comparison with other projects
When compared to the 9 comparable plants selected from Ghana, with longer tenure for capital recovery, we have computed the
the capacity tariff for the AMERI Project of about USc5.5/kWh is comparable capital recovery charge for AMERI over the 20-year
higher than the average approved capacity tariff for the 9 plants at contract period.
USc4.4/kWh.
When ranked together with the approved tariff for the 9 comparable
plants, the approved capacity tariff for the AMERI Project plant is
the highest amongst the comparable plants.
However, when levelised over the 20-year period, AMERIs capacity
charge is the lowest when compared with that of the 9 comparable
plants.
Approved capacity tariff: AMERI vs. selected plants in Ghana
6.0 5.510 5.450 5.228 5.200
4.439 4.435
5.0 4.051 3.950 3.788 3.649
USc/kWh
4.0 3.088
3.0 2.377
2.0
1.0
0.0
AMERI Amandi Sunon Cenpower Sunon Cenit Energy Trojan Jacobsen Takoradi Tema AMERI
Asogli Power Generation Asogli Power Limited Power Jelco Ghana International Thermal 2 (Levelised)
Plant I Company Plant 2 Limited Limited Power Power Plant
(SAPP1) Limited (SAPP2) Company (TT2PP)
(TICO)
Approved capacity tariff (cents/kWh) Average approved tariff (excluding AMERI)
Source: ECG, MoP and PwC analysis
PwC Final Report 7
Contents
At a glance (3/10) We noted from our review that, when compared with plants selected from Ghana and from
NB: The comparable companies were selected within sub-Saharan Africa, the installed cost per kW for the AMERI Project is higher than the
based on the type of fuel used ie natural gas average installed cost per kW in both cases. However the AMERI Project compares lower to
or light crude oil to allow comparison with the cost per kW of similar power plants that have been contracted or constructed over the last
the AMERI Project. 3 years in Ghana
Installed cost per kW: AMERI vs. Selected comparable Installed cost per kW: AMERI vs. Selected comparable
03 plants in Ghana 04 plants in sub-Saharan Africa (SSA)
We compared the project data for the AMERI Project to 10 selected Project data for the AMERI Project was compared to 10 plants selected from
plants in Ghana. However, we have been able to obtain cost data for countries within the SSA. However, we have been able to obtain cost data for
only 8 out of the 10 comparable plants. 9 out of the 10 comparable plants.
When compared to the 8 comparable plants selected from Ghana, the When compared to the 9 comparable plants selected from the sub-region,
derived installed cost per kW for AMERI of about the average the installed cost per kW for the AMERI Project of about US$1,594/kW is
installed cost per kW for the 8 plants at US$1,593/kW. When ranked higher than the average installed cost per kW for the 9 plants of
together with the installed cost per kW for the 8 comparable plants, US$1,179/kW. We noted however that contract term for AMERI (5 years) is
the installed cost per kW for the AMERI Project is the 4th lowest. shorter the contract term for comparable plants of between 15 to 20 years.
We noted that the AMERI Project has lower installed cost per kW When ranked together with the installed cost per kW for the 9 comparable
compared to similar power plants that have been contracted or plants, the installed cost per kW for the AMERI Project is the 3rd highest or
constructed over the last 3 years such as Amandi, Cenpower, Jacobsen the 7th lowest amongst the comparable plants within the sub-region. (Refer
and Genser. (Dates indicated in chart below and adjacent refers to to Section 6.1 for the list of plants and analysis of installed cost per kW)
the date of the respective PPAs)
Installed cost per kW: AMERI vs. selected plants in Ghana Installed cost per kW: AMERI vs. selected plants in the sub-
2,322 Saharan Africa
2,500
1,923 3,000 2,750
2,000 1,769 1,667 1,636 1,594 2,313
US$/kw
1,336 1,593 2,500

1,500 1,091
US$/kW
1,000 2,000 1,594
1,000 1,413
1,500 1,000 888 781 1,179
500 1,000 503 500 462
- 500
Amandi Cenpower Jacobsen Genser Takoradi AMERI** - Cenit Sunon Sunon
Energy Generation Jelco Power International 2015 Energy Asogli Asogli
-
Aba Songas AMERI Westmont Sunon AES Azito CIPREL Takoradi II Okpai
Limited - Company Ghana Ghana Power Limited - Power Plant Power Plant
Integrated (Tanzania) (Ghana)** (Kenya) - Asogli Barge (Ivory (Ivory (Ghana) - (Nigeria) -
2013 Limited - Limited - Limited - Company 2011 2 (SAPP2) - I (SAPP1) -
(Nigeria) - -1994 -2015 1996 (Ghana) - Limited Coast) - Coast) - 1998 2001
2012 2012 2012 (TICO) - 2014 2007
2005 2007 (Nigeria) - 1996 1993
1998
Installed Cost ($/kW) 1999 cost/kW
Avg. installed (excluding AMERI)
Installed Cost ($/kW) Avg. installed cost ($/kW) (excluding AMERI)
** The estimated installed cost of the AMERI Project is the Real Cost; Net Present Value Source: Power Purchase Agreements (PPAs), IPP Projects in Sub-Saharan Africa, Eberhard &
(NPV) of fixed capacity payments over the 5-year period plus cost of site clearing Gratwick, 2010 & PwC Analysis
PwC Final Report 8
Contents
We noted that the contract type for the AMERI Project; Build-Own-Operate-Transfer
At a glance (4/10) (BOOT) structure, is similar to the contract type noted for 3 (30%) out of the 10
NB: The comparable companies were selected comparable plants selected from the sub-region. The choice of the BOOT option was based
based on the type of fuel used ie natural gas on GoGs objective to grow the generation capacity of the countrys power generation
or light crude oil to allow comparison with company, Volta River Authority (VRA)
the AMERI Project.
05 Contract/concession type: AMERI vs. Selected
comparable plants in sub-Saharan Africa
Length of Installed Cost
Project information on contract or concession type for the No. Project Company Country Contract type contract COD ($/kW)
1 Aba Integrated Nigeria BOO 20/15 2010 2,750
AMERI Project was compared to those of 10 plants selected
2 Songas Tanzania BOO 20 2004 2,313
from countries within the sub-region. 3 AMERI Ghana BOOT 5 2015 1,594
We noted that, out of the 10 selected plants, 7 (70%) of 4 Westmont Kenya BOO 7 1997 1,413
them were procured under a Build-Own-Operate (BOO) 5 Sunon Asogli Ghana BOO 20 n/a 1,000
structure, whilst 3 (30%) were procured under a Build- 6 AES Barge Limited Nigeria BOO 20 2001 888
Own-Operate-Transfer (BOOT) structure. 7 Azito Ivory Coast BOOT 24 2000 781
Other research findings sighted indicated that, most 8 CIPREL Ivory Coast BOOT 19 1995 503
developing countries prefer to procure power plants under 9 Takoradi II Ghana BOOT 25 2000 500
a BOO arrangement as against a BOOT arrangement which 10 Okpai Nigeria BOO 20 2005 462
reflects commitment on the part of those countries to have 11 Afam VI Nigeria BOO 20 2007 n/a
greater involvement of the private sector in power Key:
generation in the long term. (Source: Ogotuga M., BOOT: Build-Own-Operate-Transfer; BOO: Build-Own-Operate COD- Commercial Operation Date
Financing of Power Projects in Developing Countries:
What is the overall effects of these risks to the Lender?) Source: IPP Projects in Sub-Saharan Africa, Eberhard & Gratwick, 2010 & PwC Analysis
We understand that GoG opted for the BOOT for the
following reasons;
o GoG sought to develop the capacity of the countrys
power generation company, VRA; and
o GoG wanted to increase the portfolio of generating
plants in the country but did not have funds to
purchase the power plant outright.
PwC Final Report 9
Contents
At a glance (5/10) We noted from our review that the security arrangements and termination clauses included in
NB: The comparable companies were selected the AMERI Agreement were more weighty compared to those that we sighted in the PPAs for
based on the type of fuel used ie natural gas other comparable plants in Ghana. However, the AMERI Agreement did not have a
or light crude oil to allow comparison with Government Consent and Support Agreement (GCSA) or similar GoG guarantees as do some
the AMERI Project. comparable plants.
Security arrangements: AMERI vs. Selected Termination clauses: AMERI vs. Selected comparable
06 comparable plants in Ghana 07 plants in Ghana
Out of the 10 comparable plants selected from Ghana, we noted Six (6) out of the 10 comparable plants selected from Ghana had
security arrangements for 6 of them are in the form of a standby termination clauses in their respective project agreement. The
Bank Guarantee (BG) or Letter of Credit (LC) in a specified amount termination clauses of 5 of the comparable projects required payment by
set up to mitigate the risk of non-payment by the off taker. the off-taker to the developer to cover either the purchase price of the
The security arrangement for the AMERI Project is a standby LC in facility or cost incurred by the seller in meeting its obligations.
the amount of US$51m, designed to cover six (6) months of The termination clause in the AMERI Agreement states that, upon
capacity and variable payments. termination by AMERI due to GoGs default, GoG shall be liable to
Our review of comparable power plant agreements shows that the AMERI for damages based upon the early termination of this
value of their security ranged from nil to US$25m over a coverage Agreement in an amount equal to the Required Payments (ie
period of zero to 3 months. The security arrangement of US$51m US$850,000 per turbine per month) for the remainder of the Term
for the AMERI Project is the highest in terms of value relative to (Refer to Sections 10(a) and 24 (b)(ii) of the Agreement).
comparable plants in Ghana. However, the AMERI Agreement has Based on our understanding of the termination clause in the Agreement,
a longest coverage period of six (6) months. in the event that the contract is terminated by GoG prior to its natural
The value of the AMERI security is twice as much as the security termination date, GoG will be obliged to pay US$850,000 per turbine per
provided for a recent power plant, Cenpower Generation Company month over the remaining portion of the 5-year period (this includes
(Cenpower) in 2014 which is a standby LC at US$25m. The returns on the project as well as fixed O&M costs which would only be
Cenpower project, unlike the AMERI project, was however backed incurred if AMERI had operated the plant over the contract period). This
by a Government Consent and Support Agreement (GCSA) and the is rather unusual compared to termination arrangements for similar
investor has no obligation to hand over the equipment to the plants in Ghana.
Ghanaian State after the contract period of 20 years. The AMERI However, according to GoG this is not unusual in such power agreements
Agreement did not have a GCSA or similar GoG guarantee as as most PPAs require the off-taker to pay the IPP an amount of money
pertained to some comparable plants. equivalent to what will be required to enable them obtain their full
In addition, the AMERI Agreement was negotiated when Ghana investment plus expected returns upon termination due to default of
had agreed to a Fiscal Consolidation Programme under which the Government. The plant then reverts to VRA/GoG.
execution of new GCSAs or similar GoG guarantees was not
acceptable.
PwC Final Report 10
Contents
At a glance (6/10) Our review of the risk allocation in the Agreement indicates that GoG will bear substantial
technical, operational and financial risk. GoG believes these risks are reasonable given that
GoG has control over existing power infrastructure assets through VRA and the Ghana Grid
Company Ltd (GRIDCo)
08 Risk Analysis
The Agreement shares responsibilities or allocates risk between Our review of the risk allocation in the Agreement indicates that
GoG and AMERI as follows; substantial technical (construction), operational and financial risks
AMERI have been allocated to GoG.
Risk Risk type Standard Allocation Agreement This is important as Section 23 of the Agreement provides for
Construction period
termination by AMERI if GoG fails to perform or observe any
Construction cost overun Financial Contractor GoG & AMERI
Construction delays Technical Contractor GoG & AMERI
covenant, condition or agreement. In the event of termination upon
Commissioning delays Technical Contractor GoG & AMERI GoGs default, AMERI has the right to;
Connection to grid Technical Transmission Co. GoG & AMERI i. draw down on the Letter of Credit (approx. US$51m) for any
Engineering design Technical Contractor GoG & AMERI required payments
Operating period ii. require GoG to return promptly all or any portion of AMERIs
Fuel & water supply Operational Government/ SPV GoG
equipment to AMERI
Unplanned outages Operational/ technical Shared GoG & AMERI
Off-taker/ iii. exercise any other right or remedy available to it under the
Inflation & foreign exchange Financial Government GoG applicable law (Ghanaian law)
Government default Financial Government GoG
Grid access Financial Transmission Co. GoG GoG believes that the risks taken were reasonable given the
Source: AMERI Agreement & PwC Analysis emergency situation facing the country and that adequate steps have
The Ghana National PPP Policy, 2011 which provides the been taken to mitigate the risks.
guidelines for partnerships between public and private entities in Further analysis of the risk allocation under the Agreement has
Ghana requires that, in addition to meeting the requirements of been provided under Section 5.3 (Risk Allocation).
affordability and value for money, a Procurement Entity (PE)
must ensure that there is transfer of substantial technical,
operational and financial risk on a project.
PwC Final Report 11
Contents
At a glance (7/10) Our review of the investment cost to GoG under various options indicates that an outright
purchase is cheapest in nominal and real terms if GoG had the funds to purchase.
09 Financial assessment of procurement options Options analysis -NPV
500
6.3 430.1 24.4 454.5 (6.3) 448.1
We conducted a financial assessment of the project cost using Net 450 69.1 403.9 19.9 423.7
400
Present Value (NPV) methodology for all three options outright 350 62.0
300 6.3 12.4 5.3
US$'m
purchase, rental and BOOT. 250 247.1 1.5
Our analysis shows that NPV of the outright purchase option is 200
150
US$403.9m based on nominal cost of US$438.9m. NPV of the rental 100
50
option is also US$430.1m based on nominal cost of US$477.3 m. The -
third option, BOOT also results in an NPV of US$454.5m based on
nominal cost of US$516.3m.
Based on the NPV results, the cost difference between the cheapest
and the most expensive is US$50.6m compared to nominal cost
difference of US$77.4m.
The bridge charts below shows the cost build up across the three
options. Source: MoP & PwC Analysis
Options analysis -Nominal
600
39.0 516.3 (6.3) 510.0
500 32.1 471.0 6.3 477.3
90.0 438.9
400 76.2
US$'m
300 247.1 1.5 6.3 12.4 5.3

200
100
-
Investment Engineering Site Contigency Arrangement Loan interest Fixed O&M Outright Incremental Rental Site Rental Incremental BOOT Site BOOT
cost & home preparation fees purchase cost of rental Option preparation Option (GoG) cost of Option preparation Option
support and civil and civil BOOT (GoG)) and civil
works works works
Source: MoP & PwC Analysis
PwC Final Report 12
Contents
At a glance (8/10) The estimated Return on Investment (ROI) to the developer on the AMERI Project is about
17.3% which is close to the lower end of PURCs allowable returns on power projects between
17.0% and 19%.
10 Rate of return on investment
We estimated IRR to the developer. This represents the minimum cost
of funds at which the project will break even. The table below shows a
summary of our IRR computation.
Internal rate of return Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Capacity revenues 102 102 102 102 102
Investment cost (248.6)
Site preparation and civil w orks (6.3)
Contiingency (12.4)
Fixed O&M charges - (18) (18) (18) (18) (18)
Cash flow (267) 84 84 84 84 84
IRR 17.3%
Source: MoP & PwC Analysis
The above computation assumes cost of site preparation and civil works
of US$6.3m and this relates to all costs required to get the project site
ready for installation of the AMERI plant. site preparation and civil
works include land clearing, excavation and filling, road works and
other civils works.
Our IRR computation also takes account of contingency of US$12.4m as
part of the initial capital outlay. Based on this assumption, the project is
expected to make IRR of 17.3% compared to GoG average cost of debt of
9.5% (MoP). This is close to the lower limit of PURCs allowable return
on power project of 17 -19%. The returns to the developer is also slightly
below the range of industry returns for IPPs which is 18% 23%, based
on interviews conducted in Ghana by Cambridge Economic Policy
Associates (CEPA) in August, 2015.
PwC Final Report 13
Contents
At a glance (9/10) GoGs decision to opt for a BOOT option against an outright purchase was informed by factors
such as the effects of the power outages on the economy, the estimated lead time of 9 -12
months it would take to install the power generation plant and the lack of available funding
for outright purchase
Rationale for the BOOT option Estimated savings from reduced load shedding
11 12
GoGs rationale for choosing the BOOT option was primarily based Growth in the economy of Ghana has slowed down in recent past due to
on the following considerations: load shedding. Businesses are forced to either shut down or switch to
more expensive sources of power and this, in many instances, is not
o the cost of power outages to the economy was on the rise and to
sustainable. According to World Bank estimates, the direct effect of
cut losses, there was the need to adopt the option that would
power outages to African countries is typically about 2% of GDP (The
shore up electric power generation at the shortest possible time;
State of the Power Sector in Sub-Saharan Africa, World Bank, 2008).
o the lead time for the BOOT option, according to the Ministry, is This implies that load shedding cost the economy c.US$680m using
3 months as against 9-12 months for outright purchase. In provisional 2015 GDP estimate of US$34bn (2016 Budget Statement).
nominal terms however, the BOOT option, based on information According to Ghanas Energy Commission 2015 Energy Supply and
provided by the Ministry is in total US$99.0m higher than Demand Outlook, Ghana requires a minimum generation of 16,398 -
outright purchase option (costed by VRA at US$411.0m) and 17,350GWh which translates into additional capacity requirement of
US$39.0m higher than rental option. In effect, the cost of power 450 -550MW in order to avoid load shedding in 2015.
outages on the economy over the lead time of 9-12 months for
Based on the Energy Commissions estimate, the 230 MW dependable
outright purchase far outweighs the extra cost associated with
capacity being introduced into the national grid by AMERI will reduce
the BOOT option; and
load shedding-related losses to the economy by 41.8% -51.1% (averaging
o given the emergency situation facing the country and the benefit 46.5%) which equates an annual estimate of US$284.4m-US$347.6m
of using the assets that will be acquired under the BOOT option using 2015 GDP estimate. Prorating this over 6 to 9 months (that is,
for additional 15 years after the BOOT period of 5 years. difference between the lead time of outright purchase and BOOT
(Parliamentary Debates/Hansard, Official Report, 20 March, options), and deducting the cost difference between the two options, the
2015). economy could save US$80.6m-US$159.6m as illustrated below;
Our analysis shows that in real terms, the difference between the Net Savings Vs. Economic Savings
cost of outright purchase and BOOT is US$50.6m and that of rental 200 159.6
120.1
and BOOT is US$24.4m. Compared with the cost of load shedding
US$'m
80.6
100
to the economy, GoG could be saving in total between US$80m and
US$159m if the AMERI plant comes on stream within the estimated -
6.0 7.5 9.0
3-month period . (Please refer to the adjacent text for further Lead time
analysis). Source: Energy Commission, World Bank & PwC Analysis
PwC Final Report 14
Contents
At a glance (10/10) The Ministry applied to the Public Procurement Authority for ratification of the Agreement
after Cabinet and Parliamentary approval had been secured.
Compliance with the Public Procurement Act, 2003
13 (Act 663 or the Act)
In emergency situations, a Procurement Entity i.e. MoP, may seek
the approval of the Public Procurement Authority in accordance
with Section 40 of Act 663 to single source the purchase of a good
or service. The justification for single sourcing shall among other
things include the urgency of the need for the goods, works or
services.
Regarding the AMERI Project, MoP sought to address the ongoing
load shedding in the country in the shortest possible time. As a
result, the Ministry could have requested the approval of the
Public Procurement Board for sole sourcing or limited
tendering for the procurement of the AMERI Project.
Act 663 further provides that on receipt of the single proposal or
price quotation, a formal evaluation process shall be conducted
to confirm acceptability, and an evaluation report with
recommendations for award of contract submitted for approval.
The Ministry in requesting for Cabinet and Parliamentary
approval submitted an evaluation report on the Project under
rental or BOOT arrangement as well as an outright purchase.
In view of the Cabinet and Parliamentary approval of the
agreement, the Ministry on 25 January 2016 applied to the Public
Procurement Authority for ratification of the Agreement in line
with Section 90 (2c) of the Public Procurement Act 2003 (Act
663).
PwC Final Report 15
Contents
2 Introduction and Background Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Introduction and
Background
PwC Final Report 16
Contents
2 Introduction and Background Overview of the Transaction Benchmarking analysis Financial assessment Appendices
The Office of the President has contracted PwC to carry out a VFM review of
the PPA between GoG and AMERI for the supply and installation of gas
turbines under a Build-Own-Operate-Transfer (BOOT) arrangement
Background Our mandate
Ghana has been experiencing rapid increases in electricity demand Our mandate on this engagement is to carry out a VFM review
with total electricity sales increasing by over 10% per year. However, in relation to the Power Purchase Agreement between GoG
there has not been a commensurate increase in electricity generation or and AMERI.
supply to match the demand. The countrys thermal power plants are
In respect of this mandate, and in accordance with the scope
underperforming, with high numbers of forced outages and
set out in our engagement letter dated 23 December 2015, our
unsatisfactory plant availability. This underperformance by the power
work covered the following tasks:
plants has aggravated load shedding (forced outages) since
September 2012, as the existing plants are unable to operate at full o Overview of the transaction and risk analysis;
capacity on a sustained basis. (Source: World Bank Energy Report on o Benchmarking analysis; and
Ghana, June 2013 and MoP Memo to Parliament, March 2015)
o Financial viability assessment.
In a bid to address the load shedding , the Ministry of Power (MoP
or the Ministry) considered the development of an additional
1,000MW of energy in various forms. As part of these efforts, the
Government, through the MoP had discussions with AMERI to provide
a 250MW fast track power generation solution via the installation of
ten (10) GE TM 2500+ aero derivative gas turbines in Ghana (the
Projector the AMERI Project) to augment generation capacity in the
country. The Project was to be implemented on a BOOT basis under
which AMERI would be responsible for installing, operating and
maintaining the plant for five (5) years and hand it over to the Volta
River Authority (VRA). (Source: MoP Memo to Parliament, March
2015)
Subsequently, GoG, represented by MoP has entered into a PPA with
AMERI. The PPA was structured as a BOOT agreement under which
AMERI has agreed to install 10 new GE TM 2500+ aero derivative gas
turbines, operate, maintain and transfer same in good and operable
condition and provide support services as set out in the Agreement.
PwC Final Report 17
Contents
3 Our Scope of Work Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Our Scope of Work
PwC Final Report 18
Contents
3 Our Scope of Work Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Our scope of work include among other things, a review of the commercial and
financial terms in the Agreement and highlighting potential risks
Scope of Work
Our scope of work as per our Engagement Letter (EL) dated 23 Assess the financial parameters of the Project using
December, 2015 are as follows; investment appraisal methods such as Net Present Value
(NPV) and Internal Rate of Return (IRR)
1. Documentation review
Review and highlight the commercial and financial risks in the
Carry out a review of available relevant documentation on the Agreements and comment on potential mitigants
Project. This will involve the review of relevant documents
including; Compare and benchmark the key terms of the Agreement e.g.
cost, returns, tariffs security arrangements with other similar
o The Build-Own-Operate-Transfer (BOOT) agreement; projects in Ghana and overseas
o Memorandum to Parliament of Ghana on the Agreement;
o Technical/operational/financial feasibility studies, if available;
o Project Financial Model including tariff structure; and
o Any other legal documents in relation to the Project.
2. Value for Money Analysis
Undertake a VFM assessment which would demonstrate, both
quantitatively and qualitatively, whether the Project has the ability to
provide value as procured. In this regard, we will:
o Review and advise on the financing structure in the Agreement
and highlight potential commercial and financial risks. We shall
review;
Commercial, financial and other terms;
costs and returns; and
tariffs/price of power.
PwC Final Report 19
Contents
4 Our Approach and Methodology Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Our Approach and
Methodology
PwC Final Report 20
Contents
We reviewed a number of documents including the BOOT Agreement,
Parliamentary Debate (Hansard) on the Agreement, memos to Cabinet and
Parliament on the Project
Documentation review
We reviewed the Public Procurement Act, 2003 (Act 663) and the o Letter from VRA dated 9th January 2015 to the Minister of Power
National Policy on Public Private Partnerships (PPP), dated June regarding a proposal from AMERI on power generation in Ghana.
2011 and the extent of their application on the procurement of the o Minutes on matters arising on the AMERI Project from MoP
AMERI Project.
o Financial appraisal of the AMERI Project by MoP
We obtained and reviewed copies of the following documents;
o Purchase Agreement or Build-Own-Operate Transfer (BOOT)
agreement dated 10th February, 2015 between the Government
of Ghana (GoG) and Africa & Middle East Resources
Investment Group (AMERI) LLC.
o Letter of Credit dated 29th June 2015 by GoG for the benefit of
AMERI in respect of the Agreement.
o Public Utilities Regulatory Commission (PURC) approved tariff
structure (fixed and variable) dated 12th February in respect of
AMERI plant over 5-year concession.
o Letters or memo (s) requesting for Parliamentary approval for
AMERI Agreement dated 17th March, 2015.
o Memo requesting for approval for the AMERI Project by the
Cabinet of the Republic of Ghanas dated 25th February 2015.
o APR Energy proposal to deploy ten (10) General Electric (GE)
TM2500 + aero derivative gas turbines in Ghana dated 19th
December 2014.
o Parliamentary Debates (Hansard), Official Report, 20 March,
2015
PwC Final Report 21
Contents
We faced a number of key constraints in our work, including non availability
of a Project Financial Model and directly comparable projects or transactions
Procedures performed Constraints and Challenges
We reviewed the Project to assess whether it provided value for money in the To date, we have been unable to obtain the following key documents
context of reasons for its procurement and in comparison with other thermal from the Ministry of Power;
plants that have been procured in Ghana and the sub region. In this regard , - Project Financial Model: We understand from our discussions
we performed the following: with officials at MoP that the Ministry did not develop a
Reviewed and advised on the structure in the Agreement and highlighted financial model to assess the viability of the Project.
potential commercial and financial risks. Our review covered; - Directly comparable transactions: We also faced some
o Commercial, financial and other terms; constraints regarding our inability to obtain directly comparable
projects or transactions with similar terms as that of the AMERI
o costs and returns; and Project.
o tariffs/price of power. - Approved tariffs: Information on PURC approved tariffs for
Assessed the financial parameters of the Project using investment some of the selected comparable IPPs in Ghana were not readily
appraisal methods such as Net Present Value (NPV) and Internal Rate of available for some comparable plants particularly information
Return (IRR); and on the components of these tariff such as capacity/availability
and energy charges.
Compared and benchmarked the key terms of the Agreement e.g. cost,
returns, tariffs security arrangements with other similar projects in - Project cost information: Detailed information on the cost
Ghana and the African sub-region. components of the Project was not available. As a result, we
relied on the cost build up provided by VRA to the MoP for an
outright purchase or development of the Project.
PwC Final Report 22
Contents
5 Overview of the Transaction Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Overview of the Transaction
PwC Final Report 23
Contents
5.1 Key terms of the Agreement Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Key terms of the
Agreement
PwC Final Report 24
Contents
In a bid to address the frequent power outages in the country, MoP contracted
AMERI to provide a 250MW fast track generation solution through the
installation of ten (10) GE aero derivative gas turbines
Background The Project
The Ghana power system has continued to experience supply On 10th February, 2015 MoP contracted AMERI to provide a
inadequacies for some time now mainly due to: 250MW fast track power generation solution via the
installation of ten (10) GE TM 2500+ aero derivative gas
o growing annual demand for power; turbines in Ghana to augment generation capacity in the
o the non-availability of some generating units through faults; country. The Project was to be implemented on a BOOT basis
under which AMERI would be responsible for installing,
o inadequate generation assets;
operating and maintaining the plant for five (5) years and
o mandatory inspection and routine maintenance; hand it over to the Volta River Authority (VRA). (Source:
MoP Memo to Parliament, March 2015)
o poor hydrology;
Terms of the Agreement
o absence of a reserve margin; and
The commercial proposal submitted by AMERI is summarised
o fuel supply challenges amongst others.
below:
It is worthy of note that whilst the country has been experiencing an
Key term s of the AMERI Agreem ent
exponential increase in the demand for energy over the years, there
Item Unit
has not been a commensurate increase in generation capacity to
Equipment payment (monthly/unit) US$'000 850.0
match the demand.
Number of units units 10
The foremost strategy for MoP is to bring an end to the ongoing Output of each unit (site) MW 23.0
load shedding and also put in measures to ensure that load Total capacity (ISO) MW 230.0
shedding does not recur in Ghana. This is to be achieved through Guaranteed availability % 90%
short, medium long term measures. Recognizing that Ghana has Total payment per year US$mill 102.0
exhausted her major hydro potential, it has become imperative that Variable charge per year (US$0.005/kWh) US$mill 16.6
going forward , we will have to depend a lot more on non-hydro Applicable Tariff (Year 1 - 5) Usc/kWh 14.5918
source power generation to meet the ever growing electricity Applicable Tariff (Year 6 - 20) Usc/kWh 10.4149
demand epitomized by the ever rising skylines of our major cities. Source: MoP Memo to Parliament, March 2015
(Source: MoP Memo to Parliament, March 2015)
PwC Final Report 25
Contents
GoG had an obligation to provide an acceptable and suitable site for the
installation of the AMERI Project. Security provided for the Agreement is a
standby LC to the value of US$51m
Key Obligations of the Parties (GoG and AMERI) o Provide the requisite fuel needed for the running of the
equipment;
By Section 8 of the Agreement, AMERI responsibilities shall include :
o Provide, maintain and repair the components of the plant
o Deliver, install and commission the ten (10) GE TM 2500 + aero belonging to the State;
derivative gas turbines;
o Be responsible for the carrying out of the scheduled
o Operative, maintain and repair the equipment in accordance with overhauls of the components of the plant belonging to the
manufacturers instructions and prudent industry practice; State ( the earth and grounding protection and tie in
o Ensure that the equipment is operated by qualified operators; points to the existing grounding system); and
o Be responsible for scheduled overhauls of the equipment as o Be responsible for the interconnection of the plant to the
recommended by the manufacturer, electrical system of Ghana.
o Provide onsite practical training to qualified and experienced (Source: Parliamentary Debates, Official Report, 20 March,
employees six months prior to the end of the term of the 2015)
Agreement; and Project Payment Security
o Grant access to the State to the plant on biannual basis for the As payment guarantee GoG will provide financial security to
purposes of inspection of the site, the equipment and maintenance AMERI in the form of a Standby Letter of Credit (SBLC) to
of records. cover 6 months of fixed cost of the power contract payments.
GoG responsibilities shall include: The SBLC to be issued by a First Class International Bank
acceptable to both GoG and AMERI and equal to US$51m. The
o Provide acceptable and suitable site for the installations:
SBLC shall be issued in accordance with the terms of the
o Provide utilities, site for storage and office as well as a suitable site Contract and before AMERI starts equipment mobilization.
for the setting up temporary accommodation facilities; (Source: MoPs response to AMERIs Letter of Intent, 12 Jan.
2015)
o Provide on-going operational support services at the site including
security and housing throughout the term of the Agreement;
PwC Final Report 26
Contents
The Ministry settled on the BOOT option after considering the effect of the
power outages on the economy and the time it would take for GoG to acquire
and install the plant
Fuel requirement Rationale for choosing the BOOT Option
GoG has undertaken to provide the gas required to run the turbines Officials of the Ministry considered a number of available options
(section 9 of the Agreement). GoG intends to meet this obligation by before choosing the BOOT option. These were; the BOOT,
procuring gas from the Atuabo Gas project to meet fuel requirement. outright purchase and rental options. Whiles the BOOT Option
The cost of the gas will be borne by VRA. (Source: Parliamentary costs US$510.0m over the period of five years, the cost of outright
Debates, Official Report, 20 March, 2015) purchase of the equipment over the same period, based on VRA
costing submitted to the Ministry, was US$411.0m. This shows
Assignment Provisions that the cost of the BOOT option is higher than the outright
The Agreement entitles the parties to assign their interests in the purchase option by US$99m (that is, about US$19.8m per year).
project under conditions. Such transfers are subject to the prior written The option for rental over the same period would cost the State
consent of the parties ( section 32 of the Agreement). (Source: US$471.0m which when compared to the BOOT option leaves a
Parliamentary Debates, Official Report, 20 March, 2015) difference of US$39m.
Termination obligations/payments Based on the above considerations, the Ministry settled on the
If the Agreement is terminated by AMERI due to GoGs default under BOOT option in view of the fact that it takes about 9 to 12 months
the Agreement upon the occurrence of events such as; to produce the generating GE equipment. In addition, due
consideration was given to the emergency situation facing the
o Failure to pay when due any amount required to be paid by GoG country and the benefit of using the assets acquired under the
under the Agreement; and BOOT option for additional fifteen years.
o Failure by GoG to observe or perform any covenant, condition or The choice of the BOOT option was also based on GoGs objective
agreement to be observed or performed under the Agreement. to grow the generation capacity of the countrys power generation
GoG shall be obligated to pay AMERI any amounts payable by GoG company, VRA. (Source: Parliamentary Debates, Official
through to the Termination Date (expiration of the Term of the Report, 20 March, 2015)
Agreement) including the required payments (Source: Parliamentary
Debates, Official Report, 20 March, 2015)
PwC Final Report 27
Contents
5.2 Tendering and approval process review Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Tendering and
approval process
review
PwC Final Report 28
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5.2 Tendering and approval process review Overview of the Transaction Benchmarking analysis Financial assessment Appendices
The Ministry sought the approval of Cabinet and Parliament for the
procurement of the AMERI power plant before seeking approval of the
Public Procurement Authority by way of ratification.
Provisions of the Public Procurement Act, 2003 (Act 663 or the Act)
We reviewed the provisions of Act 663 and the extent of application of the Act on the procurement of goods, works and services by MoP. The Act
applies to the procurement of goods, works and services, financed in whole or in part from public funds (Section 14, Act 663). A summary of
our review of the procurement process for the AMERI Project is as follows;
Issue Provisions PwC Comment
1. Invitation of According to Section 41 of Act 663, the procurement entity may In December, 2014, AMERI submitted a
quotation for procure the goods, works or technical services by inviting a proposal Letter of Intent (LOI) to VRA for the
single-sourcing or price quotation from a single supplier or contractor under section supply of 12 (25MW) aero derivative gas
40. turbines.
2. Request for The Act further provides that a procurement entity may engage in MoP sought to address the ongoing load
approval single-source procurement under section 41 with the approval of the shedding in the country in the shortest
Public Procurement Board. The procurement entity must possible time. As a result, the Ministry could
demonstrate that their application to single source is justified under at have requested the approval of the Public
least one of the seven set out in Section 40. The procurement entitys Procurement Board for sole sourcing or
application must be supported by one of the following reasons: limited tendering for the procurement of
o The exclusivity of the goods, works or services the fast track aero derivative gas turbines.
o The urgency of the need for the goods, works or services However, we did not sight any document
o Emergency situations triggering the need for the goods, from the Ministry to the Public Procurement
works or services Authority requesting for procurement of the
o Additional supply requirement from an already approved Project via sole source or limited tender.
supplier The Ministry however received approval
o Requirement for research and development from the Cabinet and Parliament and has
o National security concerns also applied to the Public Procurement
o Promotion of a policy Authority for ratification in line with Section
90 (2c) of the Public Procurement Act 2003,
(Act 663) on 25 January 2016.
2. Formal According to the Act, on receipt of the single proposal or price The Ministry submitted an evaluation report
evaluation quotation, a formal evaluation process shall be conducted to confirm on the Project in their request to seek
process acceptability, and an evaluation report with recommendations for Cabinet and Parliamentary approval for the
award of contract submitted for approval. Project.
PwC Final Report 29
Contents
5.3 Risk Allocation Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Risk Allocation
PwC Final Report 30
Contents
The Agreement requires GoG to ensure that there is an acceptable and
accessible site with grounding protection for the power plant
Risk Analysis
Our risk assessment of the Project is based on our preliminary review of responsibilities of the Parties (GoG and AMERI) under the
Agreement. Our comment on the impact and associated mitigation strategies to be employed are then identified.
Our comment on the key financial, technical, commercial, regulatory, political and environmental risks during the construction and
operations period of the Project are as follows;
Risk AMERI PwC comment Mitigation as advised by MoP
Agreement
Construction Period
Construction GoG and The Agreement: AMERI is responsible for providing the This risk was minimal as GoG had an existing site
cost (over-run) AMERI ten (10) GE TM2500+ aero derivative fuel gas turbine owned by VRA which was free from all
generating sets. However, GoG is responsible providing a encumbrances, obligations or liabilities.
cleared level site acceptable to AMERI free and clear from
In addition, liquidated damages and performance
encumbrances, encroachments, loans, mortgages, claims,
security were put in place to ensure that
interests, debt, dues, duties, charges, liens, burdens, taxes,
contractors and subcontractors delivered on time
cases, arrears, disputes and any litigation. AMERI shall
and according to specification.
through its subcontractors provide additional civil works
as may be required. (The Agreement, Exhibit E Subsection 4.4 of the contract for Civil works
Responsibility Summary) between GoG and the Contractor, states that The
Contractor will furnish the Employer with a
PwC Comment: This is a key risk given scale of
Performance Security in a form and from a
expenditure and short construction period (3 months).
financial institution acceptable to the Employer to
AMERIs risk will be limited to increases in the market
the value of ten (10%) of the Contact price stated in
price of the turbines over the construction period.
the Contract Agreement. The Performance
However, GoG was responsible for any increases in cost
Security shall remain valid until the date that the
arising from the acquisition and clearing of the site
provisional Taking-Over certificate is issued.
including liabilities or obligations enumerated above.
PwC Final Report 31
Contents
As per the Agreement, GoG will not hold AMERI responsible for Excusable
Delay in the delivery of the power plant on account of labour strikes, visa
delays, absence of approvals, licences and permits
Agreement
Construction Period
Construction GoG The Agreement: AMERI shall mobilise and ship equipment directly to the As indicated earlier, liquidated
delay site in Ghana. GoG was required to confirm that the site was appropriate damages were put in place to
for the operation of a power generation plant. In addition, GoG shall not ensure that contractors and
hold AMERI responsible for Excusable Delays in the delivery of the power subcontractors complete their
plant on account of the following; work on time.
o Local labour strikes Section 7.4 of the contract for
Civil Works between GoG and
o Delay in infrastructure survey along the path of equipment
Contractor dated 2nd July, 2015,
transport
stated that If the Contractor
o Custom and visa delays Fails to complete the Works
o Absence of required approvals, licences or permits within the Time for Completion,
the Contractor's only liability to
o Refurbishment, repair or maintenance of GoG provide the Employer for such failure
equipment. (The Agreement, Exhibit E Responsibility shall be to pay zero point one
Summary) percent (0.1%) of the value of the
PwC Comment: Based on the above, GoG was responsible for all risk section uncompleted for each day
associated with construction delay arising from acquisition and of delay up to a maximum of 5%
preparation of the site. This is important as the commencement of actual of the works uncompleted.
construction and installation is dependent on GoGs ability to complete its
site preparation on time.
PwC Final Report 32
Contents
AMERI is responsible for commissioning of the plant equipment with
assistance from local mechanical and electrical contractors
Agreement
Construction Period
Commissioning AMERI and The Agreement: AMERI shall be responsible for the Technical team were brought in from VRA
risk GoG commissioning of the plant equipment and Balance of Plant and the Ghana Grid Company (GRIDCO
(BoP) will be carried out by AMERIs trained installation team to assist with commissioning and testing
with assistance from local mechanical and electrical which has been successfully completed.
contractors where available. GoG would be solely responsible
for providing support in areas such as the protection settings
and coordination to help accommodate power production
from the AMERI Project. (The Agreement, Exhibit E
Responsibility Summary)
PwC Comment: There is the need to ensure that the
technology is well-proven and the post commissioning testing
program is properly implemented.
Connection risk AMERI and The Agreement: Under the agreement, AMERI is to provide Technical team from GRIDCo worked
GoG GoG with a detailed design to include recommended with AMERI to ensure effective and
interconnection at demarcation points. GoG would be efficient connection to the transmission
responsible for the cabling and solely responsible for the on the commissioning date which has
failure of any of its components, interconnection or been successfully completed.
transformers. (The Agreement, Exhibit E Responsibility
Summary)
PwC Comment: The provision of adequate transmission
capacity by commissioning date is a critical risk.
PwC Final Report 33
Contents
GoG shares in engineering design risk with AMERI including the provision
of electrical design on receiving and cabling for interconnection
Agreement
Construction Period
Engineering GoG and The Agreement: AMERI shall be responsible for providing full Technical teams from VRA and GRIDCO
Design AMERI detailed electrical and mechanical design package to GoG. GoG assisted GoG on the electrical and
shall however, be responsible for; mechanical design for interconnection to
the AMERI Project.
o Demarcation points - general arrangement on the
power take-off and fuel where AMERI will exactly
connect to GoG
o Cabling to AMERI energy interconnection and fuel
offtake
o Electrical design on receiving
o Transformers and underground utility or pipes
o Water connection points; and
o Site dimensions and site surveys (The Agreement,
Exhibit E Responsibility Summary)
PwC Comment: Based on the above, the engineering design risk
is shared between GoG and AMERI.
PwC Final Report 34
Contents
GoG must ensure that the fuel and water are in compliance with AMERIs
specification. Failure to do so will result in immediate suspension of
operation of AMERI equipment
Agreement
Operating Period
Fuel and water GoG The Agreement: GoGs responsibility to demonstrate to AMERI, VRA will be responsible for the fuel (gas)
supply risk upon request that fuel and water are in compliance with AMERIs supply to the gas turbines. This
specifications at all times. Failure to provide fuel and water with the according to GoG is a reasonable risk to
exact specifications furnished by AMERI will result in immediate take since VRA has an existing gas
suspension of operations of the AMERI Equipment and GoG shall supply agreement with Ghana National
absolve AMERI of responsibility for any shortfall in power Gas Company (GNGC).
generation capability; no liquidation damages or discounts for rental
VRA already has a water treatment plant
and service payments will be due GoG. (The Agreement, Exhibit E
that can supply the requirements of the
AMERI turbines and was reasonable for
PwC Comment: Fuel supply is key risk for any thermal power GoG to take that risk.
project. There must be an adequate fuel supply agreement in place.
GoG had to take the risk of fuel and
water supply as AMERI could not have
built the infrastructure and supply
logistics within the time frame (3
months).
PwC Final Report 35
Contents
AMERI shall be responsible for providing scheduled maintenance plan for each
turbine at the beginning of each year, which shall be subject to change. AMERI
will not be penalised for any outages brought about by factors outside its
control
Agreement
Operating Period
Unplanned GoG and The Agreement: AMERI will be responsible for providing GoG with the The Agreement has Force Majeure
outages AMERI scheduled maintenance plan for each of the turbines at the provisions to cover events outside the
commencement of each year, which will be subject to change based control of the parties such as;
upon operational conditions.
o Explosion or chemical
Additionally, any outages brought about by factors which are outside of contamination
the control of AMERI shall not debit the availability or capacity
o Strikes or work stoppages (declared
calculations. Such items include high levels of ambient dust,
legal or de factor)
contaminated fuel, or contaminated water supplied to the turbines.
Related items excluded from forced outages shall include, but not o Natural disasters
limited to: changing of inlet air filters to the turbines or cooling systems o Sabotage, theft or fuel
, fuel and/or water filters, generator cooling filters, or the need to contamination
execute corrective actions to remedy turbine fouling, and/or power
turbine fouling. (The Agreement, Exhibit E Responsibility Summary)
PwC Comment: The risk of unplanned outages can be mitigated by
reserving power to cover unplanned outages, force majeure provisions
and business interruption insurance.
PwC Final Report 36
Contents
The approved tariff for the AMERI Project allows for periodic adjustments
for inflation and exchange rate
Agreement
Operating Period
Inflation & GoG The Agreement: The approved tariff for AMERI Project provides the The PURC approval dated 12 February,
Foreign total applicable power purchase cost (UScents/kWh) shall be adjusted 2015 also stated that any variation of the
exchange from time to time within the framework of PURCs Automatic terms of the approved tariff or pass
risk Adjustment Formula (AAF), taking cognisance of changes in the through costs during the tenure of the
following variables so as to ensure AMERI continue to attain a fair risk Power Purchase Agreement would
adjusted rate of return; require prior approval of the Commission
(PURC)
o Price of Natural Gas in US$/MMBTu
o Ghana Cedi (GHS):US Dollar Exchange rate where applicable
o Inflation rate where applicable. (The Agreement, Exhibit E
PwC Comment: Inflation may affect long-term capital maintenance
costs. Tariff escalation will mitigate the risk during the operation period.
Tariffs in Power Purchase Agreements (PPAs) usually include
adjustments for exchange rate fluctuations.
PwC Final Report 37
Contents
In the event of termination on account of default by GoG, AMERI has the
right to draw down on the standby LC and require the return of all or any
portion of its equipment
Agreement
Operating Period
Government GoG The Agreement: If the Agreement is terminated by AMERI due to According to MoP, the implementing
default GoGs default under the Agreement upon the occurrence of events such agency, VRA will open an Escrow
as; Account for the purpose of lodging
o Failure to pay when due any amount required to be paid by GoG revenues to be realised from the sale
under the Agreement; and of the power. The applicable tariffs
will be paid out of this account as and
o Failure by GoG to observe or perform any covenant, condition or
agreement to be observed or performed under the Agreement. when they fall due.
In the event of termination upon GoGs default, AMERI has the right
to;
o to draw down on the Letter of Credit (approx. US$51m) for any
required payments
o require GoG to return promptly all or any portion of AMERIs
equipment to AMERI
o exercise any other right or remedy available to it under the
applicable law. (The Agreement, Exhibit E Responsibility
Summary)
PwC Comment: GoG needs to ensure availability of funds to settle
obligations as they fall due.
Grid access GoG The Agreement: GoG is responsible for providing a suitable kV GRIDCo team worked with AMERI to
electrical interconnection point to the national grid. (The Agreement, ensure grid access
Exhibit E Responsibility Summary)
PwC Comment: Access agreements required with appropriate
arrangements in place if access/capacity is not available.
PwC Final Report 38
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6 Benchmarking analysis Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Benchmarking analysis
PwC Final Report 39
Contents
6.1 Payment mechanism (Tariff analysis) Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Payment mechanism
(Tariff analysis)
PwC Final Report 40
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6.1 Payment mechanism (Tariff analysis) Overview of the Transaction Benchmarking analysis Financial assessment Appendices
The approved tariff of about USc14.59/kWh for AMERI is lower than the
average approved composite generation tariff for 6 out of 10 comparable
plants in Ghana
Approved com posite Capital Fixed
Project Com pany tariff (cents/kWh) recovery O&M NFV O&M Fuel cost
Trojan Pow er Limited 18.20 2.2209 1.7287 0.2184 14.0296
Cenit Energy Limited 15.82 2.6827 1.3679 0.3531 11.4161
Sunon Asogli Pow er Plant I (SAPP1) 15.30 4.4275 0.8000 0.8000 9.2736
AMERI 14.59 4.1769 1.3331 0.5000 8.5818
Sunon Asogli Pow er Plant 2 (SAPP2) 14.25 2.5504 1.8882 1.1200 8.6960
Tema Thermal 2 Pow er Plant (TT2PP) 13.83 2.2706 0.8174 0.2543 10.4865
Takoradi International Pow er Company (TICO) 12.21 2.1447 1.5045 0.9800 7.5822
AMERI (Levelised) 11.46 1.0442 1.3331 0.5000 8.5818
Source: Public Utilities Regulatory Commission (PURC) & PPAs NB: We did not obtain the detailed tariff breakdown for Amandi, Cenpower, Jaobsen and Genser plants
Tariff analysis for comparable plants in Ghana All the 6 comparable plants selected contain charges;
The table above presents the approved composite generation tariffs o Capital recovery;
per selected comparable plant in Ghana compared to the approved
composite generation tariff for the AMERI Plant. The table also show o Fixed operating & maintenance (O&M);
the basis of such approved tariffs per plant. These are tariffs approved o Non-fuel O&M; and
by the PURC for 2015 to 2017.
o Fuel Recovery.
Out of a total of 10 comparable power plants, the table shows the
approved tariffs for 6 of plants as we have been unable to obtain the The basis for the approved tariff for the AMERI plant is similar
approved tariffs for the remaining 4 plants. to the other comparable plants identified.
For the 6 plants for which approved composite tariffs range from **Levelised tariff: The AMERI contract is for a period of 20
USc12.218/kWh to about USc18.20/kWh, with an average tariff of years but the capital recovery charge is applicable for the first
about USc14.94/kWh. With an approved tariff of about 5 years after which it drops to zero (0). To facilitate
USc14.59/kWh, the AMERI Project compares lower with the average comparison with other projects with longer tenure for capital
approved tariff for the 6 comparable plants. In addition, the levelised recovery, we have computed the comparable capital recovery
tariff** for AMERI is the lowest compared to the tariff for the 6 charge for AMERI over the 20-year contract period.
comparable plants.
PwC Final Report 41
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6.2 Project cost analysis Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Project cost
analysis
PwC Final Report 42
Contents
Our analysis, based on only investment cost, suggests that the installed cost
per kW for AMERI is about the average installed cost per kW of US$1,593/kW
for comparable plants in Ghana
** The estimated installed cost of the AMERI
Cost of Plant Capacity Installed Cost Term
Project is the Real Cost; Net Present Value
No. Project Company (US$m) (MW) Fuel/Cycle ($/kW) (Years) (NPV) of fixed capacity payments over the 5-
1 Amandi Energy Limited 469 202 CC Natural Gas 2,321.8 25 year period plus cost of site preparation &
2 Cenpower Generation Company Limited 625 325 CC Natural Gas 1,923.1 20 civil works
3 Jacobsen Jelco Ghana Limited 637 360 CC Natural Gas 1,769.4 20
4 Genser Power Ghana Limited 5 3 Liquid Petroleum Gas 1,666.7 25
Out of the 10 comparable thermal
5 Takoradi International Power Company (TICO) 360 220 CC Natural Gas 1,636.4 n/a power plants selected, we have
Gas turbines (Barge computed the installed cost per kW
6 AMERI** 398.5 250 Mounted) 1,594.0 5 for 8 power plant developments. We
7 Cenit Energy Limited 147 110 CC Natural Gas 1,336.4 25 have not been able to obtain cost data
8 Sunon Asogli Power Plant 2 (SAPP 2) 360 330 CC Natural Gas 1,090.9 25
for the remaining 2 plants.
9 Sunon Asogli Power Plant I (SAPP1) 200 200 Natural Gas 1,000.0 20
10 Tema Thermal 2 Power Plant (TT2PP) n.a 50 CC Natural Gas n.a n.a For the 8 comparable plants for which
11 Trojan Power Limited n.a 25 Natural Gas n.a 5 the installed cost per kW statistic have
Source: IPP Projects in Sub-Saharan Africa, Eberhard & Gratwick, 2010 & PwC Analysis Key: CC- Combined Cycle; n/a- not available been computed, our analysis shows
that the installed cost per kW ranges
Project cost analysis for comparable power plants in Ghana
The table above presents data on cost, capacity, fuel type or technology between about US$1,000/kW to about US$2,322/kW for the comparable
and contract term for 10 different thermal power plants in Ghana plants. That of the AMERI plant is estimated at about US$1,594/kW which is
which we have compared to similar data for the AMERI power plant. the 4th lowest.
These power plants have varied contracted capacities and costs as Again, for the 8 comparable plants with the cost per kW statistic, our
shown in the table above. In order to allow for comparison between the analysis indicates that the installed cost per kW for the AMERI plant of
various plants, we have computed the installed cost per kW statistic for US$1,594/kW is approximately equal to the average installed cost per kW of
each plant. The installed cost per kW statistic measures the about US$1,593/kW for the comparable plants in Ghana.
indicative cost incurred per kW of plant capacity provided, which can We noted that the AMERI Project has lower installed cost per kW compared
then be compared to the same statistic for other plants since plant costs to similar power plants that have been contracted or constructed over the
and capacities varies per plant. last 3 years such as Amandi, Cenpower, Jacobsen and Genser.
We note that the cost analysis presented here is based on only total It should be pointed out that unlike the Amandi, Cenpower and Jacobsen
investment cost for each plant, and therefore excludes all forms of plants, the other plants were built 15 to 20 years ago.
operational costs associated with the plants.
PwC Final Report 43
Contents
Our analysis also indicates that the installed cost per per kW for AMERI which
is about US$1,594/kW is higher than the average of US$1,179/kW for selected
comparable plants across the sub-region
Cost of Plant Size/ Installed Cost
No. Project Company Country (US$m) capacity (MW) Fuel/Cycle ($/kW)
1 Aba Integrated Nigeria 385.0 140 Gas-fired open-cycle power 2,750
2 Songas Tanzania 316.0 180 Natural gas/open cycle 2,313
3 AMERI Ghana 398.5 250 Gas
Gas turbines (Barge mounted)/
Turbine (Barge Mounted) 1,594
4 Westmont Kenya 65.0 46 Kerosene 1,413
5 Sunon Asogli Ghana 200.0 200 Combustion Engine 1,000
6 AES Barge Limited Nigeria 240.0 270 Natural gas/open cycle (barge mounted) 888
7 Azito Ivory Coast 225.0 288 Natural gas/open cycle 781
8 CIPREL Ivory Coast 105.6 210 Natural gas/open cycle 503
9 Takoradi II Ghana 110.0 220 Light crude oil/single cycle 500
10 Okpai Nigeria 462.0 450 Natural gas/combined cycle 462
11 Afam VI Nigeria n/a 630 Combined Cycle Gas Turbines n/a
Source: IPP Projects in Sub-Saharan Africa, Eberhard & Gratwick, 2010 & PwC Analysis Key: n/a- not available
Project cost analysis for comparable plants in Sub-Saharan For the 9 selected comparable plants in SSA for which the installed cost
Africa (SSA) per kW statistic have been computed, our analysis show that the
The table above presents data on cost, capacity, fuel type or technology installed cost per kW ranges between US$462 to about US$2,750/kW.
as well as cost per kW for 10 different thermal power plants from That of the AMERI plant is estimated at about US$1,594/kW which
selected countries in SSA, which are compared to similar data for the falls within the higher end of the range. Indeed, when compared to the
AMERI power plant. These include power plants in Kenya, Tanzania, other power plants across the sub region, the installed cost per kW for
Ivory Coast, Ghana and Nigeria. the AMERI plant is the 3rd highest.
As with the cost analysis for the comparable plants in Ghana, we note For the 9 comparable plants for which we have the installed cost per
that the cost analysis presented here is based on only total investment kW statistic, our analysis indicate an average installed cost per kW of
cost for each plant, and therefore excludes all forms of operational costs about US$1,179 which is lower than the installed cost per kW of
associated with the plants. US$1,723/kW for the AMERI plant.
Out of the 10 comparable thermal power plants selected, we sighted We noted however that the contract term for AMERI (5 years) is
already computed installed cost per kW for 8 power plant developments shorter the contract term for comparable plants of between 15 to 20
and have computed that of 1 (the Sunon Asogli). We have not been able years.
to obtain similar data for the remaining plant (Afam VI).
PwC Final Report 44
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6.3 Concession arrangement Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Concession
arrangement
PwC Final Report 45
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6.3 Concession arrangement Overview of the Transaction Benchmarking analysis Financial assessment Appendices
About 70% of the selected comparable plants were procured under a BOO
arrangement. The choice of the BOOT option was based on GoGs objective to
grow the generation capacity of VRA
Length of Installed Cost
No. Project Company Country Contract type contract COD ($/kW) We understand that GoG opted for the BOOT for the
1 Aba Integrated Nigeria BOO 20/15 2010 2,750 following reasons;
2 Songas Tanzania BOO 20 2004 2,313 o GoG sought to develop the capacity of the
3 AMERI Ghana BOOT 5 2015 1,594 countrys power generation company, VRA;
4 Westmont Kenya BOO 7 1997 1,413 and
5 Sunon Asogli Ghana BOO 20 n/a 1,000 o GoG wanted to increase the portfolio of
6 AES Barge Limited Nigeria BOO 20 2001 888 generating plants in the country but did not
7 Azito Ivory Coast BOOT 24 2000 781
have funds to purchase the power plant
8 CIPREL Ivory Coast BOOT 19 1995 503
outright.
9 Takoradi II Ghana BOOT 25 2000 500
10 Okpai Nigeria BOO 20 2005 462
11 Afam VI Nigeria BOO 20 2007 n/a
Key:
BOOT: Build-Own-Operate-Transfer; BOO: Build-Own-Operate COD- Commercial Operation Date
Source: AMERI PPA & IPP Projects in Sub-Saharan Africa, Eberhard & Gratwick, 2010
Contract/concession types for comparable projects in the
sub-region o BOOT: Under this arrangement, in addition to building,
The table above presents, among other project data, the contract or owning and operating the power plant, the developer will be
concession type arranged for selected IPPs across the sub-region. required to transfer the facility, after a set period of time, to
For all the projects or plants sampled, we noted two (2) main types the public utility provider at some pre-defined consideration.
of concession: the Build-Own-Operate-Transfer (BOOT) and the
The AMERI plant has been procured under the BOOT
Build-Own-Operate (BOO) types of concession. Summary
arrangement, which is in line with the concession arrangements
explanation of each concession type is provided as follows:
for a minority of the selected plants across the sub-region.
o BOO: Under this arrangement, the power developer builds, owns
and sells power from its power plant within the host country to
the public utility provider without any provision within the
contract to transfer the facility at any point in time to the public
utility provider.
PwC Final Report 46
Contents
6.4 Security and termination Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Security and
termination
PwC Final Report 47
Contents
The security arrangement for AMERI is weighty compared to that of
comparable plants in Ghana. AMERIs security package is a standby LC to the
value of US$51m covering 6 months capacity and variable payments
Cost of Plant Term
Project Com pany (US$m ) (Years) Security arrangement GCSA Term ination
Standby letter of credit, in the amount of Buyer (ECG) shall pay Seller the termination payment
Amandi Energy Limited 469.0 25 US$14m. Three (3) months prior to COD. Yes in consideration for the purchase price of the Facility
ECG to immediately pay the value of the full
Generation Capacity for the remaining term. On
Standby letter of credit, in the amount of payment, the Seller shall transfer the ow nership of
Jacobsen Jelco Ghana Limited 637.0 20 US$20m three (3) months prior to COD. Yes the Facility to ECG
Buyer (ECG) shall pay the Seller the termination
Standby letter of credit, in the amount of payment in consideration for the purchase price of
Cenpow er Generation Company Limited 600.0 20 US$25m. Three (3) months prior to COD. Yes the Facility
Tema Thermal 2 Pow er Plant (TT2PP) n/a n/a n/a No n/a
Bank guarantee of US$10m to cover at least 30 Seller is entitled to terminate the PPA upon providing
Sunon Asogli Pow er Plant 2 (SAPP2) 360.0 25 days obligations of Buyer No due notice and reasonable period for negotiations
Standby letter of credit, in the amount of US$7m ECG shall pay the Seller the termination payment in
Cenit Energy Limited n/a 25 on or before the effective date of the PPA. No consideration for the purchase price of the Facility
Genser Pow er Ghana Limited 5.0 25 None specified No Not specified
Issuance of a Bank Guarantee in the amount of ECG shall pay all verifiable cost incurred by the Seller
Sunon Asogli Pow er Plant I (SAPP1) 200.0 20 US$10m from the COD No in meeting its obligations.
Issuance of a Bank Guarantee in an amount
equivalent to total energy and capacity
payments for tw o (2) months of seller's Termination may be done upon seller's event of
Trojan Pow er Limited n/a 5 operation No default. No termination payment specified.
Takoradi International Pow er Company (TICO) 360.0 n/a n/a n/a n/a
GoG shall pay any amount payable to AMERI through
to the date of termination (upon expiry of the
Standby
Source: letter
PPA for of credit,
each Power in Plants
the amount
GCSAof Government Consentcontract), including
and Support the required payment. On
Agreement
US$51m for six (6) months of Capacity and payment, Seller shall transfer ow nership of the
AMERI 398.5 5 variable payments No facility to VRA/GoG.
GCSA- Government Consent and Support Agreement
PwC Final Report 48
Contents
Upon termination GoG) shall pay any amount payable to AMERI through to
the date of termination (upon expiry of the contract), including the required
payment
Security arrangement for comparable plants in Ghana Termination clauses for comparable plants in Ghana
Out of the 10 comparable plants selected from Ghana, we noted Out of the 10 comparable plants selected from Ghana, we noted
security arrangements for 6 of them- all being in the form of a termination clauses for 6 of them, out of which 5 of had
standby Bank Guarantee (BG) or Letter of Credit (LC) with value termination clauses which required payment by the off taker to the
ranging from nil to US$25m covering a period of zero to 3 months. developer to cover either the purchase price of the facility or to
The security arrangement for AMERI is a standby LC in the amount cover all cost incurred by the Seller in meeting its obligations.
of US$51m, designed to cover six (6) months of capacity and variable Based on our understanding of the termination clause in the
payments. Agreement, in the event that the contract is terminated by AMERI
This is significant considering that recent IPP such as Jacobsen and due to GoGs default then GoG will be obliged to pay US$850,000
Cenpower do not have such terms. It should however be noted that per turbine per month over the remaining portion of the 5-year
these were backed by GCSA. The AMERI Agreement was negotiated period (this includes returns on the project as well as fixed O&M
at the time when Ghana had agreed to an IMF Fiscal Consolidation costs which would only be incurred if AMERI had operated the
programme under which the execution of a new GCSAs or similar plant over the contract period). On payment, the AMERI shall
guarantees was not acceptable. The AMERI security arrangement transfer the ownership of the facility to VRA/GoG.
was therefore a negotiated position in the absence of the GCSA. This is significant considering that the recent IPPs such as
Jacobsen and Cenpower do not have such terms. However, these
IPPs where backed by GCSAs. The AMERI Agreement was
negotiated at a time when Ghana had agreed to an IMF Fiscal
Consolidation Programme under which new GCSAs or similar GoG
guarantees were not acceptable.
PwC Final Report 49
Contents
6.5 Operating costs (fuel arrangement) Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Operating costs (fuel
arrangement)
PwC Final Report 50
Contents
6.5 Operating costs (fuel arrangement) Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Most of the power transactions sampled from the sub-region provide for the
Government or the Utility Provider in the host countries to procure fuel for the
plant which is similar to the arrangement under the AMERI deal
Cost of Plant
No. Project Company Country (US$m) Fuel/Cycle Fuel arrangement
1 AMERI Ghana 398.5 Gas turbines (Barge Mounted) Government procures fuel
2 Azito Ivory Coast 225.0 Natural gas/open cycle Government procures fuel
3 Takoradi II Ghana 110.0 Light crude oil/single cycle Government procures fuel
4 CIPREL Ivory Coast 105.6 Natural gas/open cycle Government procures fuel
5 Okpai Nigeria 462.0 Natural gas/combined cycle Project Company provides fuel
6 Afam VI Nigeria n/a Gas Turbine/Combined Cycle Project Company provides fuel
Project Company provides fuel with
7 Sunon Asogli Ghana 200.0 Combustion Engine support from Utility Co.
Songo Songo gas to provide at a rate of
US$0.55/MMBtu for turbines I-V and at
8 Songas Tanzania 316.0 Natural gas/open cycle US$2.7/MMBtu for turbine VI
9 Westmont Kenya 65.0 Gas Turbine (Barge mounted)/ Kerosene Utility arranges fuel
10 AES Barge Limited Nigeria 240.0 Natural gas/open cycle (barge mounted) Utility arranges fuel
11 Aba Integrated Nigeria 385.0 Gas-fired open-cycle power n/a
Source: AMERI PPA & IPP Projects in Sub-Saharan Africa, Eberhard & Gratwick, 2010
Fuel arrangement for comparable plants in the sub-region
Out of the 10 selected comparable plants from sub-Saharan Africa, It is worth noting that, most of the power plants sampled from
information on fuel arrangement was available for 9 plants. Of the 9 the sub-region were designed to use Natural Gas as a source of
plants for which we sighted information on fuel arrangement, we noted fuel, which is similar to the AMERI plant.
that 6 of them were contracted to have fuel arranged by either the
Government or the Public Utility provider in the host country, which is
in line with the arrangement under the AMERI deal, where GoG is
expected to procure the fuel for running the plant.
As shown in the table, there were only 3 plants for which the developers
had to provide the fuel for running the plant. Where the developer
provides the fuel, cost of the fuel is recovered through payments either
factored into the tariff build-up or separately received from the off
taker under terms and conditions specified in the PPA.
PwC Final Report 51
Contents
7 Financial assessment Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Financial assessment
PwC Final Report 52
Contents
7.1 Investment appraisal Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Investment
appraisal
PwC Final Report 53
Contents
The swing in cost of the power plant among the three options is US$77.4m,
outright purchase being the lowest, US$438.9m. The outright purchase option,
however, increases GoGs exposure to major project risks construction and
operational
In this section, we present our financial assessment of the project under Interest payment is also assumed to be 9.5% based on Governments
the available options - outright purchase, rental and BOOT. average cost of funds (Ministry of Power). Over the debt repayment period
(which has been matched to the term of the power contract), total interest
The cost of the power plant varies with each option. Each option presents
payment of US$76.2m would be required.
a different cost implication to GoG, the highest being BOOT. The bridge
chart below shows cost build up across the options. The values in the Outright payment for the plant may also require contingency of c.5%
chart are based on the nominal amounts stated in the power contract. based on usual contingency provision for similar projects. This translates
into c.U$12.4m and this is expected to be part of the initial capital outlay.
Options analysis -Nominal
600
39.0 516.3 (6.3) 510.0
500 32.1 471.0 6.3 477.3
90.0 438.9
400 76.2
US$'m
300 247.1 1.5 6.3 12.4 5.3

200
100
-
Investment Engineering Site Contigency Arrangement Loan interest Fixed O&M Outright Incremental Rental Site Rental Incremental BOOT Site BOOT
cost & home preparation fees purchase cost of rental Option preparation Option (GoG) cost of Option preparation Option
support and civil and civil BOOT (GoG)) and civil
works works works
Source: MoP and PwC analysis
Site preparation and civil works relates to all costs required to get the land
Outright purchase ready for installation of the AMERI plant. These include land clearing,
This is the expected cost of the power plant if Government opts to build excavation and filling, road works and other civils works.
it from scratch and make full payment upfront. Given Governments Additionally, Government will incur fixed operations and maintenance
limited resources however, this option will involve debt funding which (O&M) charge of US$90m over the first five years. This relates to the cost of
will require 3-6 months to reach financial close and will also result in periodic servicing of the power plant over the period.
two main associated cost: Based on the above mentioned cost items, Government is expected to incur
Arrangement fees US$438.9m on the outright purchase option, as shown in the adjacent
bridge chart. This could reduce to US$362.7m if payment is made without
Interest payments
recourse to debt funding. Although this option is lowest among the three, it
Based on historical debt funding contracted by Government, we have increases GoGs exposure to construction and operational risks associated
assumed an arrangement fee of 2% which amounts to US$5.3m. with the project.
PwC Final Report 54
Contents
The rental and BOOT options will introduce incremental costs of US$39.0m
and US$77.4m respectively over the first 5 years of operation. The BOOT
option, however, presents GoG with the least project risk
Rental Build-Own-Operate-Transfer
Under the option to rent the power plant, AMERI will bear all In nominal terms, the BOOT option is the most expensive among the
engineering, procurement and construction cost in addition to the three. On the other hand, it is the option that presents GoG with the
cost of funds to finance the project. Besides, AMERI will bear least project risk. GoG is expected to incur incremental cost of
construction risk associated with the project. US$39.0m under this option, bringing up total cost to US$516.3m
However, GoG will pay to AMERI total incremental cost of US$32.1m (that is, total cost to GoG which includes land preparation and civil
over the outright purchase costing. Additionally, GoG will bear the works). Please refer to extract of bridge chart below.
cost of land preparation estimated at US$6.3 m (contingency
included). Please refer to extract of bridge chart below. Options analysis -Nominal
600
Options analysis -Nominal 39.0 516.3 (6.3) 510.0
500 477.3
600
400
US$'m
500 32.1 471.0 6.3 477.3
438.9 300
400
200
US$'m
300
100
200
-
100 Rental option Incremental BOOT Site BOOT option
NPV (GoG) cost of option NPV preparation NPV
-
BOOT NPV (GoG) and civil
Outright Incremental Rental option Site Rental option works
purchase cost of rental preparation (GoG)
and civil Source: PwC and Power Contract
works
Source: PwC and Power Contract
As shown in chart above, whereas total project cost to GoG is
As shown in the chart above, GoG will pay a total of US$477.3m under US$516.3m, the amount due to the developer under this option is
this option (that is Rental option (GoG)). Rental option relates to US$510.0m, the difference representing cost of land preparation and
amount due to the developer under the rental option. The difference civil works.
represents cost of site preparation and civil works which will be Compared to the cost of outright purchase, GoG will incur
undertaken by a separate entity. incremental cost of US$77.4m over the term of the agreement.
PwC Final Report 55
Contents
Our NPV analysis shows a swing of US$45.5m in the three options, outright
purchase being the lowest, US$403.9m
We conducted financial assessment for each cost option outright Based on our NPV analysis, outright purchase will cost US$403.9m
purchase, rental and BOOT using the Net Present Value (NPV) and based on nominal cost of US$438.9m. Renting the power plants on the
Internal Rate of Return (IRR) methodologies. other hand presents an NPV of US$430.1m (inclusive of site
Under the NPV methodology, the sum of the present values of the preparation and civil works cost) based on nominal cost of US$477.3m.
discounted cash outflows from the power plant over the contract term The BOOT option also shows an NPV of US$454.5m (inclusive of site
are compared with the nominal cost for each option. preparation and civil works cost) based on nominal cost of US$516.3m.
The cash outflows comprise capital and running cost of the power plants. The results of our NPV analysis shows narrowing of the swing in cost
Per the contract, GoG will bear the cost of operations and maintenance under the three options. The swing reduces from nominal of US$77.4m
(O&M) and fuel charges in addition to the capital cost of the plant. to US$50.6m. This implies that in todays monetary terms, the
difference in cost under the options is less, compared to difference in
The key parameters used in our NPV analysis are the expected cash
the nominal amounts earlier discussed.
outflows stated in the AMERI Power contract, and for the outright
purchase and rental options, we discounted the cash flows using average Internal rate of return
GoG cost of funds of 9.5% (Ministry of Power). Discounting of cash flows Under this methodology, we estimated the implied rate of return at
under the BOOT option was carried out using average returns of 18.0% which the net present value of the power plant will be zero. This
allowable by PURC on power projects in Ghana. The summary of our represents the maximum cost of funds at which the project will break
NPV analysis is provided in the bridge chart below. even.
Our IRR computation was carried out from the developers perspective
and it shows the returns that AMERI could make on its investment in
the power plant. The table below shows a summary of our IRR
computation.
Contiingency (12.4)
Fixed O&M charges - (18) (18) (18) (18) (18)
Cash flow (267) 84 84 84 84 84
IRR 17.3%
Source: PwC and Power Contract Source: PwC and Power Contract
PwC Final Report 56
Contents
The project IRR is higher compared to the cost of funding
The above computation assumes site preparation and civil works cost
of US$6.3m and contingency of US$12.4m as part of the initial capital
outlay. Based on this assumption, the project is expected to achieve
IRR of 17.3% compared to GoG cost of debt of 9.5%. This implies that
the project could be profitable, although the expected returns to the
developer is close to the lower limit of PURCs allowable return on
power project of 17 -19%. The returns to the developer is also slightly
below the range of industry returns for IPPs which is 18 23%, based
on interviews conducted in Ghana by Cambridge Economic Policy
Associates (CEPA) in August, 2015.
If the developer is able to avoid the contingency cost of US$12.4m,
returns on the project will improve to 19.4%, as shown in the table
below.
Contiingency -
Fixed O&M charges - (18) (18) (18) (18) (18)
Cash flow (255) 84 84 84 84 84
IRR 19.4%
Source: PwC and Power Contract
PwC Final Report 57
Contents
8 Appendices Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Appendices
PwC Final Report 58
Contents
8.1 Letter from the Office of the President Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Letter from the
Office of the
President
PwC Final Report 59
Contents
8.1 Letter from the Office of the President Overview of the Transaction Benchmarking analysis Financial assessment Appendices
PwC Final Report 60
Contents
8.2 Glossary Overview of the Transaction Benchmarking analysis Financial assessment Appendices
Glossary
PwC Final Report 61
Contents
Glossary
Term Definition/Meaning
AAF Automatic Adjustment Formula
AMERI Africa & Middle East Resource Investment Group, LLC
BG Bank Guarantee
BOO Build-Own-Operate
BOOT Build-Own-Operate-Transfer
BoP Balance of Plant
CC Combined Cycle
CIPREL Compagnie Ivoirienne de production dlectricit
COD Commercial Operation Date
ECG Electricity Company of Ghana
EL Engagement Letter
GCSA Government Consent and Support Agreement
PwC Final Report 62
Contents
Glossary (contd)
GDP Gross Domestic Product
GE General Electric
GHC Ghana Cedis
GNGC Ghana National Gas Company
GoG Government of Ghana
GRIDCO Ghana Grid Company
GWh Gigawatt per hour
IPP International Power Producer
IRR Internal Rate of Return
ISO International Organisation of Standardisation
KV Kilovolt
PwC Final Report 63
Contents
Glossary (contd)
KW Kilowatts
KWh Kilowatts per hour
LC Letter of Credit
LOI Letter Of Intent
MMBTu Million British Thermal Unit
MoP Ministry of Power
MW Megawatts
NB Nota Bene
NPV Net Present Value
N/A Not Available
PwC Final Report 64
Contents
Glossary (contd)
O&M Operations and Management
PE Procurement Entity
PPA Power Purchaser Authority
PPP Public Private Partnership
PURC Public Utilities Regulatory Commission
PwC PriceWaterhouseCoopers
SAPP1 Sunon Asogli Power Plant 1
SAPP2 Sunon Asogli Power Plant 2
SBLC Standby Letter of Credit
TICO Takoradi International Power Company
TT2PP Tema Thermal 2 Power Plant
PwC Final Report 65
Contents
Glossary (contd)
USc United States cents
US$ United States Dollars
VFM Value For Money
VRA Volta Revenue Authority
PwC Final Report 66
2015 PricewaterhouseCoopers Ghana Ltd. All rights reserved. PwC refers to the member firm, and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
http://www.pwc.com/structure for further details.

Dr. Kwabena Donkor Responds To Bright Simons On AMERI Allegations

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Dr. Kwabena Donkor Responds To Bright Simons On AMERI Allegations

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RESPONSE

TO BRIGHT SIMONS OF IMANI

1. AMERI ENERGY US$510.67M

Please find attached the following as appendices:

1. AMERI ENERGY US$510.67M

Please find attached the following as appendices:

1,336 1,593 2,500

300 247.1 1.5 6.3 12.4 5.3

300 247.1 1.5 6.3 12.4 5.3

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