The Ghanaian government has renegotiated a controversial power purchase agreement (PPA) between Ghana and Africa and Middle East Resources Investment Group (Ameri).

The government is still expected to have to back the new agreement with a letter of credit (L/C).

Payment difficulties

The government claims the new deal is saving the country US$51.34 million. It follows months of controversy as the government struggled to make payments of US$10 million per month under the original PPA.

Critics said that agreement was far too expensive for purchases from Ameri's 250-megawatt emergency power plant.

L/C backing

In the PPA signed in 2015, the government was required to provide a standby L/C to Ameri for an amount of US$51 million.

The standby L/C was to ensure that the monthly payments were secured and in the case of default, Ameri would be able to fall back on it to obtain payment.

The original L/C was revolving and it is anticipated that a similar L/C will be required to back the new agreement.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.