Bright Simons replies Dr. Dominic Ayine: “You’re not an expert”

Bright Simons is Vice President of IMANI Ghana

The Vice-President of IMANI Ghana, Bright Simons has replied former Deputy Attorney-General and Minister of Justice, Dr. Dominic Ayine, on the ongoing debate over the Ameri deal. On Newsfile today, Dr. Dominic Ayine, who debunked Bright Simons submissions on the matter stated emphatically, “There is nobody in Ghana who is more knowledgeable in International Trade and Investment law than Dominic Ayine.”

But Bright Simons has hit back, explaining that no one can claim to be an expert on such public policy issues as the Ameri deal. Find below his response to Dr. Ayine as posted on Bright Simons Facebook page:

 

Someone has been kind to send me an audio file of the former Deputy Attorney General’s (“ex-DAG”) remarks about my person and “analysis” on Newsfile this morning (Ghanaians are alert!). I thank them.

I have listened carefully to the ex-DAG’s remarks. Some of the said remarks bother on ad hominem, so I would proceed to ignore those.

There was also an appeal to “expertise”, which I would deal with briefly.

I accept the claims of the ex-DAG that he is a specialist in investment & trade law. I disagree with the subtle implication however that this makes his views on the matter authoritative enough to offset any other views.

I have had cause to warn about “appeals to expertise” in matters of public policy in this country.

“Public policy” is a very interdisciplinary area, and no one is likely to be an ‘expert’ on any public policy issue, strictly speaking.

This simple reality confuses a lot of people, and leaves them dissonant when they listen to PhDs who seem unconvincing in their analysis.

Take AMERI for instance. To be able to comment as a “real expert” on every facet of the deal you would need PhDs in at least the following subject areas:

1. FDI
2. UNCITRAL
3. Aeroderivative Applications
4. Gas Turbine Costing
5. Gas Turbine Design and Development
6. EPC Structuring & Valuation
7. Electricity Peakload Costing
8. Present Value & Discounting in Finance
9. Conciliation & Alternative Dispute Contract Law
10. Public Sector Energy Procurement

Not only is it impossible to find someone with true expertise in all of these areas, it may even be the case that finding someone with a PhD in even two of these areas is impossible. At best, multidisciplinary teams are required, and in countries such as ours those are no easier to assemble.

That’s why public policy activism and analysis focuses rather on the skillset to be able to quickly assemble evidence from experts in order to develop a sound, interdisciplinary, position quickly enough to influence public policy, which is often subject to the short cycles of the news environment (the ex-DAG will marvel at the access level we have to different grades of expertise globally, including in his own field).

As someone who has been intimately involved in public policy analysis and activism in this country for more than a decade I am perfectly positioned to address the issue of AMERI, and perhaps even more so than our friend, the investment & trade law specialist cum guru, the ex-DAG.

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In public policy matters where often vested interests and political goals are paramount, ‘capture’ of academics and experts mean that “appeals to expertise” are more likely to be deployed to cover the wrong thing than to advance the right thing. We can simply not take the word of specialists-cum-politicians for it. I won’t belabour this point any further.

On the substantive issues, I am actually quite happy about, even grateful for, the ex-DAG’s intervention.

He mentioned clearly that he was the lead dealmaker on the Ghanaian side, and that all the other Ghanaian negotiators and specialists reported to him.

His contribution has greatly helped narrow down the AREAS OF CONTENTION between those of us opposed to AMERI and promoting a ‘haircut’ of the monthly amounts being paid and those, like him, who support the deal and want it to stand. The referees are the general public and the government of the day.

Here are the areas both sides agree on (much clarified following the ex-DAG’s comments).

1. The deal with AMERI emerged out of an original rental agreement with APR. At some point the government felt a need to convert the agreement to a BOOT and hired AMERI to do this.
[We have posited a theory that Metka rented the machines to on-lease to PPL who then on-leased same to AMERI.]

2. The deal is based on monthly installments being paid by Ghana in what is more or less a ‘hire-purchase’ arrangement. At the end of five years if we have kept up with all our payments, the machine would be transferred to us.

The following are the areas where we disagree, in some cases AGGRESSIVELY.

1. Ex-DAG: The machines cost $240 million.

US: We have reviewed both specific catalogs by APR, GE (Powergen unit), and other dealers. We have also used Thermoflow’s GT Pro library data as well as reference benchmarks from the Gas Turbine World Handbook (GTW) to compute global averages.

The catalog price of the TM2500+ plants come to $220 million.

We believe that hire-purchasing ten of them at a go should lead to a discount that brings the price to close to $200 million. In fact, the referent capital cost per MW data deduced from the GT Library and GTW analysis for fast-track aeroderivative applications as a whole range from $690,000 to $960,000 per MW (that is $172 million to $240 million) with our particular configuration falling closer to the lower bound.

2. Ex-DAG: In addition to these plants themselves (think of that as the ‘Engineering’-level cost), the cost of installing, maintaining and operating them for five years come to $120 million. Thus, the total EPC plus concession cost is $360 million.

US: This is just complete balderdash (to borrow the ex-DAG’s own words).

The reference databases and global benchmark data (openly available to anyone in the world) show installation and commissioning costs for turnkey, aeroderivative turbine based, power plants as going for less than $2.4 million. In fact, in this case, we can actually use a “bill of quantities” approach to estimate the cost by looking at precisely what AMERI was tasked to do in the contract and what the TM2500+ manuals indicate as required to complement the “Mechanical Balance of Plant” ALREADY provided with the machines in order to have a fully operational power station feeding power into the grid.

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All that the layperson needs to appreciate this fact is to note that GE offers to get the TM2500+ going within 3 days if the buyer prefers. What amount of work can be done within 3 days to warrant an additional cost of $120 million? But read on for further details.

A. Because the TM2500+ plant is a turnkey system it comes with most of what is required to get it going right from the box according to GE’s own manuals (just as some electronic devices come with cords and batteries included).

B. The TM2500+ comes with the following primary systems: The injection systems for fuel, the air inlet, control room software/firmware, fire detection systems, control module hardware, gas compressors and AC generators.

C. AMERI merely had to add: generator step-up transformers, the piping, general wiring, instrument wiring, assembly of battery terminals to fit baseplates, lighting protection, and general ventilation ducting.

D. The substation equipment was delivered at Ghana’s costs (grid failure protection as well, naturally). So were the civil works, access roads, utilities, sewerage, drainage, demineralised water systems, fuel systems, security, and even staff living quarters! (Don’t forget that the AMERI Turbine complex is hosted on the grounds of the Takoradi Power Station and thus shares all the facilities there).

Anyone can go to Alibaba and prepare their own bill of quantities and let us know if they can easily justify even $2 million for AMERI’s component of the project.

3. Ex-DAG: Bright Simons/IMANI has/have never addressed operational and maintenance costs.

US: In fact, we have. We have always done that. We have in fact criticised the past government aggressively for going for emergency/fast-track plant configurations for 10 to 20 years when most people go for these systems for 6 months to 1 year, renewing the rental on an as needed basis.

In fact, we have always said that such conduct amounts to sheer incompetence. These aeroderivative plants have a high maintenance schedule and a shorter lifespan and are suitable for deficits in peak power output only, not baseload shortfalls.

But as far as costing is concerned the matter is neither here nor there as operating and maintaining a turnkey, aeroderivative, system of ANY type does not come anywhere near the capital costs. The GTW and GT Pro reference data suggest that fixed and variable operational and maintenance costs for our kind of configuration is in the region of about $5 million a year.

In fact, this is where the $250 million EPC and O&M cost in an outright purchase scenario comes from. It is from this base cost that a hire-purchase charge of $360 million becomes justifiable.

And it is also indeed why a total cost to the nation of more than $510 million amounts to nothing less than DANGEROUS RECKLESSNESS. Anyone who can justify a $150 million needless loss does not wish this country well.

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4. Ex-DAG: This country has paid NOTHING to AMERI so far.

US: This is the most bizarre statement in the ex-DAG’s remarks. This country was required to start paying $8.5 million right from the very month that commissioning was complete and commercial operation began.

We have paid this amount plus an additional 0.5 cents cost for each Kwh of power actually produced because for aeroderivative plants, maintenance is supposed to happen during operational hours, in frequent bursts.

Furthermore, we have had to secure a letter of credit on standby basis so that whenever we are in default AMERI can draw on it to pay itself. This LOC came at a cost! In fact, no other thermal plant has so far enjoyed this sweet guarantee except Karpower. Ghana HAS INDEED PAID millions of dollars to AMERI through Stanbic, and the ex-DAG needs to withdraw this misinformation as a matter of urgency.

5. Ex-DAG: AMERI is the cheapest thermal plant, except for Sunon Asogli.

US: This point is baffling in its incoherence and brazen show of ignorance. What we have in the case of AMERI is not a normal capacity charge arrangement. It is a capacity charge plus arrangement because operational maintenance periods are both frequent and not counted in determining the firing hours.

Given that this is an aeroderivative turbine, maintenance is more or less continuous, and downtimes can be as much as 40% of total contract term. Even if we use 25% downtime as the threshold, and factor in the fact that, unlike every other powerplant other than Karpower, we are responsible for plant hosting and running expenses in the case of AMERI, and set a $38 million annual fueling cost, the EFFECTIVE TARIFF for AMERI comes to a crazy 23 US Cents per kilowatt-hour!

WHO TOLD THE FORMER DEPUTY ATTORNEY GENERAL THAT 23 US cents per kilowatt-hour is the cheapest in this country? Is he aware that the composite bulk generation charge in this country is just a little above 8 US cents???

6. Ex-DAG: Ghana’s acceptance of the wording of the arbitration clause in the AMERI Agreement (the cloned APR agreement) in relation to UNCITRAL was fine.

US: We disagree. The Agreement SHOULD have explicitly indicated that in the event of an arbitration “aequo et bono” and “amiables compositeur” should apply because UNCITRAL clearly indicates in its rules that these considerations cannot be assumed without explicit reference. And we, Ghana I mean, needed these flexibilities since it was likely that in any dispute Ghana would be more in need of equitable considerations compared to the counter-party given the very oppressive and stringent commercial terms of the contract, which the Ghanaian dealmakers accepted.

I treat the above as the primary areas of contention between the anti-AMERI-as-is camp and the Pro-AMERI-as-is camp, headed by the ex-DAG.

And as far as we on the anti side are concerned, the *battle has been joined*.

[Someone kindly forward this to the ex-DAG if they know him. No thanks, however, to his good self for interfering with our Easter Saturday.]

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