$510 AMERI Deal: Government violating payment terms - AMERI

The power purchasing agreement between the Government of Ghana and Africa & Middle East Resources Investment Group (AMERI) has not suffered any breach of contract on the part of the company, the Parliamentary Committee on Mines and Energy has been told.

Ameri, since the contract was signed in 2015, has fulfilled its obligations and operated strictly within the terms of the contract, however, it is rather the government of Ghana that has violated the terms of the contract by denying full payment to Ameri for the past nine months.

This disclosure was contained in a statement the company submitted to the Committee on Mines and Energy in Parliament, Friday afternoon.

The statement, was in response to an invitation from the Committee to Ameri to help in inquiries it was making into series of allegations raised against the Company by the intriguing Member of Parliament for Asokwa, KT, Hammond, the very person that seconded the motion to pass the Ameri contract when it was tabled before Parliament in 2015.

“In violation of the binding terms of the BOOT terms of the agreement, Ameri has been denied its full due payment since past nine months. However, Ameri still continues to produce electricity and has not drawn down the letter of credit, which is otherwise a contractual right of Ameri. Ameri has continued to support the Government and the people of Ghana as per His highness’s faith and trust in the Government and in Ameri’s commitment to build a stronger bridge between the United Arab Emirates and the Republic of Ghana.

“…Ameri Project has been the most reliable energy supplier to the country, with no shut downs and its contribution to the energy mix of Ghana is substantial. The value for money for the Ameri project is also most favorable for the economy of Ghana, with the lowest levelized energy tariff (confirmed by the PwC report).

At the end of the five-year term of the BOOT and upon its expiry, the entire plant becomes the property of the Ghana government, which will have the capacity to generate electricity for at least 15 years at a nominal operating cost. Ameri has taken the financial and operational risk to develop, construct and transfer this asset to the Government in an operating de-risked position, at a nominal USD $1 value. The Government’s only obligation in this transaction is to pay for the electricity it consumes”, the statement noted.

THE PUBLISHER reproduces the entire statement Ameri submitted to the Committee:

GROUP LLC (AMERI ENERGY) ON THE ENQUIRY INTO MATTERS RELATING TO THE AGREEMENT BETWEEN THE GOVERNMENT OF GHANA AND WRITTEN STATEMENT ON BEHALF OF AFRICA AND MIDDLE EAST RESOURCES INVESTMENT AMERI ENERGY FOR INSTALLATION OF 10 GE TM 2,500+ AERO DERATIVE GAS TURBINES UNDER OPERATE, MAINTAIN AND TRANSFER ARRANGEMENT.

TO: THE HONORABLE CHAIRMAN OF THE COMMITTEE ON MINES AND ENERGY.

1. We received from the Select Committee on Mines & Energy, an invitation bearing reference number OP/SCME/17/49 dated 09 Oct 2017 on the subject cited above. Attached to the said letter was a copy of the Minutes of a meeting between the Select Committee on Mines and Energy with Hon. K.T. Hammond, dated the 18th day of September 2017 and documents numbered 1 to 6 and titled as follows:

(a) Boot Assignment Agreement between Ameri Energy Equipment Trading LLC and Power Projects Sanayi Insaat Ticaret Limited Sirketi dated 17th September 2015.

(b) EPC Deferred Payment Facility Agreement between Africa & Middle East Resources Investment Group (Ameri Energy LLC); Ameri Energy Power Equipment Trading LLC and Power Projects Sanayi Insaat Ticaret Limited Sirketi (PPR) dated 17th July 2015.

(c) A Public Utility Regulatory Commission letter dated February 12, 2015 on the Approved Tariff for 10 23MW BOOT Ameri Energy Power Plant.

(d) A Ministry of Energy Request for Parliamentary Approval dated 17th March 2015.

(e) A Commercial License for Ameri Energy Equipment Trading LLC.

(f) An Assignment of the Agreement document dated 4th May, 2015 of which the Government of Ghana gave its consent.

2. We have carefully reviewed the above documents and the letter of invitation and observed that Hon. K.T. Hammond, on the 1st day of August 2017, moved an urgent motion which read as follows:

“That this House rescinds its decision to approve the Build, Own, Operate and Transfer Agreement between the Government of the Republic of Ghana and Africa and Middle East Resources Investment Group LLC (Ameri Energy) for the installation of ten (10) GE TM 2,500 aero derivative gas turbines, operate, maintain, transfer and provision of support services that the House took on March 20, 2015, for reasons of gross misrepresentation. (Hon. Kobina Tahir Hammond, MP for Adansi Asokwa).”

3. As a company, we take this opportunity to appear before your Honorable Committee as a privilege to clarify and respond to the many misconceptions and bad commentary that our company has suffered in the public space, since the motion that precipitated this Committee’s enquiry.

4. We wish to submit this statement to your Honorable Committee upon your request for us to assist you in “clarifying some issues” relating to the above subject. After a careful examination and review of Minutes of the Meeting of the Committee, there appears not an iota of doubt that the motion in question is challenging the actions lawfully carried out by this same Honorable Committee in the year 2015. Furthermore, Hon. K.T Hammond, who was a member of the Committee and remains so today, claims that the Committee was subjected to misrepresentations by its own members thereby challenging its own actions and the legality of same. Hence, putting the proceeding of this Committee into question and doubt.

5. Mr. Chairman, “gross misrepresentation” […..define]. If the question of misrepresentation arises as claimed through the motion of Hon. K.T. Hammond, then such accusation is on the Committee.

6. As the subject in question revolves around the legality and merits of the proceedings of this Honourable Committee as well the proceedings of the Parliament of the Republic of Ghana, therefore the respondent for such a proceeding can only be this Committee itself.

This being so, the matter relates to same party of the BOOT Agreement, therefore Ameri Energy is not legally liable for any clarifications in this context, thereby being a bona fide party to the BOOT Agreement has its legal rights fully safeguarded and guaranteed under the terms of the Agreement and the applicable law.

Any action taken against Ameri under these proceedings will be illegal, unlawful and without merit.

7. We wish to put on record that all actions of Ameri Energy, since its entry into Ghana, has been in compliance with the laws of the Republic of Ghana and indeed this Honourable Committee has had the opportunity to review the transaction and positively recommended the transaction to the House for approval and subsequent ratification. Mr. Chairman, any allegation(s) of gross misrepresentation in our view are totally misconceived and utterly false. In the following paragraphs we present the correct information that clarify the position and remove the doubts cast by some quarters which are completely baseless and unfounded. These facts will further aid the Committee’s work under reference.

8. It is highlighted that this is the only one and the very first opportunity for Ameri to appear before this respected forum, which is a part of the Honorable Parliament. We thank the respected Chairman for granting this much-needed opportunity to us which grants us the opportunity to put the facts right and make an honest and fair attempt to minimize the damage that the ill-informed campaign has made to Ameri.

9. The only one point of contention in the Minutes of the Meeting of the Committee and the motion is only highlighting the negligence or inability of a committee member to perform the statutory duties and discharging its responsibilities in a diligent manner that were entrusted to it/them by the Honorable Parliament. As per the binding terms and conditions of the BOOT Agreement, it is not the obligation of Ameri to request for or take steps that were required to secure the ratification of the Honorable Parliament but it was the sole and exclusive responsibility of the Government of Ghana to approach Parliament in accordance with the applicable law, the protocol, the rules as well as in compliance with the discipline of Parliament. Ameri has never been engaged in any way whatsoever with Parliament or any committee of it during the entire course of the transaction.

This being so, there is no legal, contractual or a moral ground existing for the committee or the Assembly to question the legality, accuracy and transparency of Ameri’s conduct and the project. It is a matter of record which cannot be emphasized enough and cannot be questioned or challenged. It is a matter of record that Ameri has never given any statement or made a representation before any office/forum of the legislative or the executive arm of the Government of Ghana.

10. The above further establishes the fact that Ameri is a bona fide party to the transaction and it is the counterparty to the transaction that is raising the questions for its own self. It is unfortunate, to see that in this whole case, the Government is the claimant and the respondent both. The Government is attempting to make a case against itself. Ameri is an international third party, who has a legal, binding contract with the office of the Government of Ghana, through the office of the Minister of Energy.

11. After a careful examination and review of Minutes of the Meeting of the Committee, there appears not an iota of doubt that Motion in question is questioning and challenging the actions lawfully carried out by this Honorable Committee in the year 2015.

12. It is also evident that the motion in question suffers from a manifest error, is totally out of context and misconceived. Some questions with regards to the assignment of the BOOT Agreement and the corresponding responsibilities of the Government of Ghana have been complete read and understood out of context and the same is against the spirit of the instant clause.

13. In the month of March, Ameri was unofficially requested by three members of the Addisson Committee that they would like to visit Dubai in an informal basis to discuss the Ameri transaction and clarify some internal concerns. At the time of this request, Ameri was not aware of any official committee being formed by the Ministry of Energy in this regard. Ameri as confused by this request however obliged and facilitated this request. The visiting party, headed by Mr. Philip Addison, had some questions around the sequence of events of the Ameri transaction due to some purported missing Government records. Ameri clarified the raised concerns and provided the required documents to the visiting party who indicated that they were duly satisfied by Ameri’s response.

Ameri had inquired if this was an official meeting for which minutes of the meeting should be recorded, however the same was denied and Ameri assumed that this was a completely informal meeting, whose object was only to clarify the matter in question. It later transpired to Ameri’s utter shock that the visiting party was part of a nine (9) member official ministry committee. Had Ameri been officially summoned by the Ministry in Ghana to clarify any issues in question, Ameri would have been delighted to assist the committee in understanding the true facts of the matter.

14. Mr. Chairman, this entire transaction started when Ameri Energy submitted an unsolicited proposal for investment, in response to which Volta River Authority (VRA) issued a Letter of Intent (LOI) for a three-year bridging solution for Rental Power Generation Facility, on 23rd December 2014 (copy attached as Annex A).

15. After internal deliberations, the Government concluded that between the Rental and the BOOT option, the Rental option would not achieve the required Value For Money (VFM), evidence by VRA letter dated 9.01.2015 (copy attached as Annex B). The Rental Option was a 3-year bridging solution with no long-term value c.$ 374.6 million, capacity plus variable charge, as per the issued LOI. Ameri Energy gave a revised proposal on Build Operate Own and Transfer (BOOT) basis dated 5th January 2015 (the Revised Proposal) (copy attached as Annex C). Whereby, the Government of Ghana gets to own the entire 250MW Power project at USD $1, nominal value at the end of the term. The Entire project is a going to be a debt free project, with new GE Equipment maintained and operated at the best Original Equipment Manufacturer (OEM) Standard for the term of the BOOT Agreement. The project transferred to the Government, shall have an expected life of at least 15 more years with a minimal operation cost.

16. The Government taking all stakeholders on board, reviewed the merits of the rental vs BOOT and decided to opt for the BOOT option on the recommendation letter sent to the Ministry of Power by VRA. (Copy attached as Annex C). This recommendation was further endorsed by PwC, in the subsequent report.

17. In light of the recommendation of VRA, the Ministry of Power issued a new letter of intent for a five (5) year BOOT, dated January 12th, 2015 (copy attached as Annex D).

18. Upon issuance of the second LOI for the BOOT, GoG and Ameri Energy entered into detailed discussions on the draft Agreement, however in parallel, the GoG also initiated their procurement and regulatory process and sought a legal opinion by the Attorney General’s office in Ghana.

19. On the 10th of February 2015, the BOOT Agreement was signed and executed by the GoG through its Ministry of Power with a condition precedent including that the contract needs a formal parliamentary ratification before it finally becomes effective.

20. During the course of negotiation, VRA suggested a quicker route, wherein VRA could directly contract with Ameri, without a legal requirement of taking the BOOT Agreement for the parliamentary ratification. However, upon legal review of the statutory framework of Ghana, Ameri rejected VRA’s proposal and insisted, that this agreement must be taken to the Parliament of Ghana for validation and enforceability, in order to secure its legal, commercial and financial risks involved into the transaction. Thereafter, the Government took the BOOT Agreement to Parliament for debate and deliberation on the content of the BOOT Agreement by the Members of Parliament.

21. The contents of the BOOT Agreement were discussed and debated upon in the Parliament. Committee on Energy on Mines only had one observation that the equipment of the Ameri Project must be brand new (copy of the committee minutes is attached as Annex E). The committee’s concern was addressed and satisfied upon a detailed review of the terms of the BOOT Agreement, whereby Ameri undertook to install the brand-new equipment only. Soon after, the agreement was duly ratified by the Parliament of Ghana on the March 20th, 2015 (copy attached as Annex F) after going through its due process and having sought comments on the parliamentary committee on power which consisted of members of the government including the members of the opposition. A decision was unanimously passed to go ahead with the transaction.

22. Government declared this project as an emergency nature project, with a commitment from Ameri to build it on urgent basis to meet the dire power shortfall the country was facing at that time. Ameri committed to the Government to meet those urgent requirements of the Government in the form of binding terms in the BOOT Agreement. In compliance of the terms of the BOOT Agreement, Ameri developed the project and declared the commercial operations of the whole project in the record time of less than four (4) months and have been operational since February 2016. It is pertinent to note that the motion challenges the nature of the project as not being an “Emergency nature”, there is a list of conditions precedent that the Government and Ameri had to satisfy before the contact became effective. The Government has been unable to meet the Conditions Precedents till very recently and despite the fact that the Government took more than six months to even meet two conditions precedent which were the establishment of the SBLC and preparation of the Site for installation of the equipment by Ameri. Though the BOOT Agreement was not effective, Ameri still went ahead and procured the equipment for the project, in order to meet the much-pressed urgent requirement of the Government.

23. Minimizing its customary risk, the Government did not enter into a Government Consent and Support Agreement with Ameri and has also not provided any sovereign guarantee (standard for other projects of this nature). Ameri has only been provided with a Standby Letter of Credit, which is c. 10% of the value of the entire project. Therefore, Ameri has fully borne the entire financial risk and the Government of Ghana risk for itself as well as for its financiers/the sub-contractors. The Government’s Standby Letter of Credit (SBLC) only covers six (6) months of its payment obligations towards Ameri Energy, out of the five-year term (copy attached as Annex G).

24. It is also being misconstrued in the instant motion that the Ameri project is being financed by PPR and the same subcontractor is assuming the entire risk of the Project. It must not be ignored that PPR is a mere subcontractor, who is only financing its services towards the project and is performing its limited services towards its obligations as defined in its agreement with Ameri. PPR has no legal or contractual relationship with the Government, nor is it responsible for any performance for the benefit of the Government. The financing arrangement for PPR services is based on the contractual arrangement between Ameri and PPR, whereby PPR has undertaken to perform its services as Ameri’s subcontractor on the basis of and in reliance of the securities provided by Ameri. The Subcontractor does not bear the Ghana risk, which is solely bourn by Ameri. The payment guarantees to the subcontractor do not come from the Government of Ghana, but from Ameri only, which include the corporate and the personal guarantees of Ameri’s sponsors.

25. In total conformity and compliance of the terms of the BOOT Agreement, Ameri Group, the holding company, assigned the BOOT Agreement to its wholly owned subsidiary/affiliate company, which was incorporated as the project SPV. This assignment is as per the commercial/industrial practice and not bared by the law or the terms of the governing agreement. The subject assignment was duly approved and consented to by the Ministry of Energy, Government of Ghana vide its letter dated 6th May, 2015 (copy attached as Annex H).

26. Furthermore, as part of the commercial structuring, fully mandated by the BOOT Agreement, Ameri engaged an EPC & O&M operator who brought in a portion of financing towards the project. Upon engagement of the EPC Contractor and its financing of the project, Ameri voluntarily and independently intimated the Government of Ghana through the Ministry of Power on the 7th October 2015 (copy attached as Annex I) about the creation of a security between Ameri and PPR. The receipt of which was duly acknowledged by the Ministry of Power, vide its letter dated 12th October 2015 (copy annexed as Annex J).

Upon reading the Minutes of the Meeting, it appears that Hon. K.T. Hammond confused the legal term “assignment” of rights as security on a transaction with the ordinary meaning of the word assignment. It is important to highlight before the Honorable members of the Committee that the assignment is by way of pledge and a mere establishment of right which only comes into effect upon a default of the Assignor. Therefore, it must be noted that since the date of the creation of the security till the date of this statement, Ameri Energy is the legal and rightful owner of the project and is the only party who is responsible to perform the under the BOOT Agreement with the Government of Ghana. The Government of Ghana has no legal relationship with our “subcontractor” (PPR) and is not obliged to perform any services to the Government of Ghana under the BOOT Agreement.

27. While Ameri project, was running in full compliance of the terms of the BOOT Agreement, the Government decided to appoint PricewaterhouseCoopers (PwC) to conduct a value for money analysis for the Project. PwC is one of the leading audit firms and has historically been the auditor for a number of projects for the Government of Ghana because of its credibility and trust developed throughout its term of service for the Government. In its report, PwC concluded “The levelized tariff for AMERI is the lowest compared to the tariff for 7 comparable plants” in Ghana (copy of the report attached as Annex K).

28. Ameri Project has been the most efficient power producer for the Government of Ghana both in terms of its quick commercial operations as well as the c. 95% production availability which goes beyond the guaranteed availability (90%), per the terms of the BOOT Agreement. Ameri Project has been the most reliable energy supplier to the country, with no shut downs and its contribution to the energy mix of Ghana is substantial. The value for money for the Ameri project is also most favorable for the economy of Ghana, with the lowest levelized energy tariff (confirmed by the PwC report).

At the end of the five-year term of the BOOT and upon its expiry, the entire plant becomes the property of the Ghana government, which will have the capacity to generate electricity for at least 15 years at a nominal operating cost. Ameri has taken the financial and operational risk to develop, construct and transfer this asset to the Government in an operating de-risked position, at a nominal USD $1 value. The Government’s only obligation in this transaction is to pay for the electricity it consumes.

In violation of the binding terms of the BOOT terms of the agreement, Ameri has been denied its full due payment since past nine months. However, Ameri still continues to produce electricity and has not drawn down the letter of credit, which is otherwise a contractual right of Ameri. Ameri has continued to support the Government and the people of Ghana as per His highness’s faith and trust in the Government and in Ameri’s commitment to build a stronger bridge between the United Arab Emirates and the Republic of Ghana.

Ameri humbly submit itself for any clarifications in front of this honorable Committee and requests this Committee to view the Ameri deal on its merits and values that it brings to the country. Ameri’s investment in Ghana has been a way forward for other Middle Eastern investor to view potential investments in long term infrastructure projects as per the vision of the Government of Ghana. The sanctity of the ratification of the Parliament of Ghana is the absolute guarantee and comfort to an international investor. We have full faith in the Honorable Committee to dispel justice and conclude this matter in all fairness to positively enhance the bilateral relations between the countries and its people.

Respectfully Submitted,