IMANI Alert: Dr. Kwabena’s fact finding mission on Ameri Power Saga


Yesterday evening, we took our campaign to get the Government of Ghana to renegotiate the effective tariff of AMERI downwards to Good Evening Ghana, the late night public affairs talk program.

The former Power Minister, Dr. Kwabena Donkor, was on the show. However, he refused an on-set debate. The producers therefore had to set up an unwieldy three-part show that saw our lead policy analyst on energy, Bright Simons panting for time to make his case in the last segment of the program.

The constraints notwithstanding, the whole episode was immensely useful. Dr. Kwabena Donkor (DKD) has now gone on record on a wide range of issues that can be publicly fact-checked.

The results however are not pretty.

What exactly did he say?

Below we list the facts and the non-facts that the former government functionary produced in the thirty or so minutes he was in the studio.


1. DKD finally admitted that the catalog price of the ten TM2500 plants is $22 million each.

Of course we now know that this amount is in fact the “retail price”. But it is a nice climb-down all the same from the $360 million stated by his former Deputy on the radio programme Newsfile, as well as the $240 million mentioned by the Former Deputy Attorney General on the same show later.


1. Apparently, DKD believes that the TM2500+ is a gas turbine.

It is NOT. The actual gas turbine is the LM2500. The LM2500 is complemented by a wide range of other auxiliaries that makes up the *bulk of the full, connected, power-producing, plant*.

That is why the TM2500+ can be set up and be ready to go in 3 days according to GE. If it was just the gas turbine in the package it would have required anything from 6 months to a year to set it up and commission it within a fully functioning power plant.

2. Apparently, DKD believes that the gas turbines that came with the AMERI deal costs $22 million each.

NO, they do not. The LM2500, which is the actual turbine in the TM2500+ “power plant in a box” costs $9.5 million each on the open market (

They would cost less if one chooses to buy multiple sets directly from the manufacturer or its preferred dealers.

3. DKD believes that it costs $118 million to procure the “balance of plant” and maintain the power plants. This is fairly close to the $120 million quoted by his Deputy too.

No. This sum is completely ridiculous. The bulk of the balance of plant is already included in the TM2500+. The additional wiring, cabling, tubing and transformers needed to integrate the plants into a single complex, and interconnect said complex to the power grid should barely cost $5 million using Thermoflow GT Pro and Gas Turbines World Handbook data.
Anyone can take a look at the balance of plant inventory and calculate it themselves

Government of Ghana was responsible and paid for the civil works plus major auxiliaries for fuel and demineralised water etc, not to talk about the securing of land lease rights, total tax exemptions, access roads, utilities and all regulatory approvals. Ameri, unlike other power plants, did not spend a dime on these essential project development costs.

The attached breakdown shows what one would typically get for less than $22 million to produce 25 MW of power from a gas plant like the plants provided to us by AMERI.

O&M costs for simple cycle, gas turbine, costs like ours are benchmarked by the
International Energy Association (IEA) at $20/kwh. (

The total costs per year for our 250MW installation thus come to $25 million over 5 years.

Hence the *raw* costs of the 250MW AMERI plant is in the region of $230 million
(factoring the bulk discount of 10% on the 10 plants) or at most $250 million (adding a
contingency fudge factor) and no where near the $338 million DKD says was spent or the $360 million offered by the former Deputy Attorney-General (ex-DAG) either.

4. DKD would have us believe therefore that the $510 million capital cost plus $83
million variable cost (making a total of $593 million total cost of ownership to Ghana)
are the product of a reasonable internal rate of return of 22.225%.

This is based on woolly-headed facts however. Firstly, 22.225% is quite high. But the truth is that the $338 million is the wrong investment figure as we have shown already.

Using a high bound of $250 million capital and O&M costs produces a CRAZY 38%
internal rate of return (IRR) for this investment.

This is twice the return on several, riskier, power projects in Africa such as the Bujagali dam in Uganda.

According to Ernst and Young, even risky solar power projects in the region see an average unlevered IRR of 10.4%. Anyone who does not see anything fishy about a 38% IRR in a project such as this one where a standby letter of credit to the tune of $51 million and several other credit enhancements have more or less de-risked the prospect clearly has issues.

*Regardless how DKD dices it, tosses it, turns it, or barbecues it, a gaping hole of $150 million always appears in the valuation of this deal.*

5. According to DKD, the levelised cost of energy over 20 years makes AMERI the
cheapest power plant in NPV tariff terms in Ghana.

These are wrongheaded calculations riding on a consistent tendency to ignore the fact that Ghana is supplying gas from Atuabo for free to AMERI when we cannot even service the loans on the gas plant.

Using the net heat rate of the LM2500 of 9,453 to compute the cost of gas (Atuabo
prices) give us a fuel cost of $200 million if the plant operates at its standard capacity factor and uses only relatively cheaper natural gas rather than light crude oil, which is the backup fuel.

Even if this sum is discounted by using Henry Hub global spot prices (rather than the
local Atuabo prices) and the lower plant availability factor (instead of the capacity
factor), one still has to deal with a fuel cost bill in excess of $120 million a year, which
per the contract IS GHANA’S BURDEN.

To obtain the full capital plus variable cost total sum, these costs have to be added
up, bringing the overall financial burden on Ghana to $1193 million (or nearly $1.2
billion) over five years. This is roughly twice the cost of the Karpower deal.

This furthermore brings the levelised cost over twenty years to more than 32 US Cents per Kwh!

Quite frankly absurd to be honest.

6. But it is a BOOT? What about the transfer of the asset to Ghana, asks DKD.

No, this is not ameliorated in any way by the fact that we shall receive the depreciated
AMERI equipment after five years. Even if we subtract the depreciated value of the
plant from this global amount to establish a pure rental charge (and for this type of plant the depreciation curve is by no means linear), we still come to the rather frightening sum of $1.05 billion, which is still nearly twice the rental charges Karpower is taking from us. And note that Karpower is far from an optimal deal!

It is very important to bear in mind that aeroderivative gas turbine based plants have a considerably shorter life spans than conventional gas fired plants. In fact, the financial analysis would be much worse were depreciation costs to he factored into the Ameri valuation prior to running comparisons between it and other gas – fired plants in the system.

(By the way, the Minister is incorrect in his assertion that AMERI is the only BOOT
contract signed in Ghana. Early Power is a BOOT too).

7. Ghana did not have the money to explore any other financing option apart from AMERI.

Unbelievable logic. For a deal that is costing this country a total of roughly $210 million
a year minimum, how can finding $210 million to buy the plant outright and pay for year one 0&M costs plus the “balance of plant” be considered expensive?

Let’s get the facts very clear. We chose to pay between $210 and $240 million a year for five years straight before owning the plant, when we could have paid $210 million upfront and owned the plant, after which our annual operating costs would have decreased by about 45%, saving us at least $300 million over the five years.

That argument really shouldn’t be repeated anywhere else.

8. According to DKD, AMERI has the lowest capacity charge among thermal plants in Ghana.

This point is so damn wrong it is unbelievable that a former Minister of State can make it on national, primetime, television. 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.

Compare that to 4.58 US Cents for Early Power or 5.75 US cents per Kwh for CENIT. With the exception of the power plants acquired under rushed circumstances, such as Karpower, the practice has been for the capacity charge to be considerably lower than the energy charge.

And when one thinks about it carefully such an approach forms the right conditions for an Economic Merit Order Dispatch system based on short-run marginal costs, which DKD professes to supports.

That jargon here simply means that this country is supposed to prioritise the consumption of cheap power from the cheapest power plants in the national portfolio before shifting to more expensive plants as and when required to meet demand.

Such a model usually ignores capacity charges to focus on the variable component of
the power price called the “energy charge”. Relatively lower capacity charges and a shift of the bulk of the cost used to rank available power plants on their cost efficiency to the energy charges enable clearer spreads and variation among the prices being charged by power producers.

In the case of Karpower and AMERI, however, the energy charges are more or less
insignificant since the contracts with these folks have been designed such that we pay them the full projected sum, rather than just enough to cover their sunk costs, regardless of whether they produce or not.

Because capacity charges are linked to capacity cost recovery it is evident that
AMERI’s very high capacity charges are due to its inflated capital (i.e. setup) costs.

Considering that we are paying for fuel, the operators of AMERI have almost
insignificant variable O&M costs, hence their variable charge is merely more money for the bank!

9. DKD tossed in a bunch of other deals he and the squadron recently at post at the helm of our energy affairs supervised.

He mentioned AKSA and insisted they are already producing power for the grid at a more expensive rate than AMERI.

The truth is that the AKSA project has experienced delays in the mobilisation of
CAPEX after the Turkish investor boasted to analysts of annual EBITDA of more than $100 million, obviously gloating over the easy pickings in Ghana. AKSA has DEFINITELY not sold more expensive power than AMERI’s to VRA or ECG. DKD is best served to retract that claim.

10.. DKD repudiates allegations of fraud in the agreement by asking why the government has chosen the path of negotiation with AMERI with regard to a fraudulent transaction.

The reason is very simple: under current international arbitration law, the arbitration clause in a fraudulent contract can stand alone. This is known as the principle of ‘separability’. Even if the contract is adjudged fraudulent, arbitration may still be required to set the said contract aside.

Since the arbitration clause in this particular GOG-Ameri contract is a three-step process starting with negotiations, we have no choice than to attempt
renegotiation in good faith.

11. One unfortunate allegation leveled against Bright Simons and IMANI by DKD was that the organisation refuses to engage the former Government officials involved in the AMERI deal.

This is untrue. Attempts to broker an open and honest dialogue cum debate have
simply been met with stonewalling by these officials. IMANI is always open to dialogue and debate on any platform on Earth regarding this matter.

12. In the view of DKD, this whole ‘Revise AMERI’ campaign by IMANI is the product of a personal vendetta by Bright Simons, and nothing more.

This is a shocking conclusion. No one at IMANI has anything remotely personal against any of the former Government functionaries, and certainly not against DKD. Our only interest is to establish that the AMERI contract was inflated in order to compel a reduction in the monthly cash outflow that this benighted country is saddled with, resulting ultimately in a reduction of energy prices in Ghana.

It is crazy to see Ghanaian industrial consumers paying as much as 5 times, or even more, what the average US industrial consumer pays for the same amount of power.

There is absolutely no animosity directed towards the former Government officials. We would wish for nothing more than to work together with them to persuade AMERI of the need to disgorge some of the obscene profits they are making monthly on this deal.

At this stage we expect the Government of Ghana to indicate clearly its support for its own ad hoc committee’s recommendation to renegotiate the AMERI deal.

With energy sector debts inching towards the $3 billion mark, sympathy for the difficult situation facing the government in this critical area of national life would be much reduced if the government does not do all in its power to redress the monstrously wasteful, ongoing, transaction called AMERI.

— IMANI Center for Policy & Education

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