Minority wants $3bn Chinese loan reviewed

The Minority in Parliament on Thursday expressed concern on certain “illegalities” in the $3 billion Chinese loan agreement, urging a critical review of the process to enable the country maximise the benefits of the facility.

They held that the present agreement, apart from those illegalities, was fraught with unfavourable terms and conditions for Ghana and with the potential for corruption and fraud, cautioning that the nation would be short-changed if it went ahead with the process.

The Minority registered their worry at a press conference in Accra to react to last Thursday’s edition of the daily press briefing at the Flagstaff House at which Information and Media Relations Minister Mahama Ayariga allayed doubts by critics that the Chinese loan may not materialize due to irregularities in the agreement, assuring that government had met all obligations for the acquisition of the facility that was due to hit the country soon.

Minority Leader Osei Kyei-Mensah-Bonsu said his side was not against the acquisition of the loan and that regardless of the good intentions for pursuing that facility, the process of obtaining the loan and the details of the agreement negated parts of the Law and gave room for dishonesty.

He said for instance, the loan was in breach of Section 18(7) of the Petroleum Revenue Management Act that restricted the collateralisation of oil revenues for debts of period not exceeding 10 years, but half of the three billion loan had been collateralised with Ghana’s oil revenue, insisting that the Chinese were lifting the oil even when the facility was yet to hit the country.

Mr Kyei-Mensah-Bonsu, who is also the Member of Parliament for Suame, said it was also a breach of the Constitution since Parliament approved of the agreement without approving the principal finance documents.

He explained that the Master Facility Agreement (MFA) for the loan required government to prove that Parliament had permitted its entry into the finance documents. These include the Subsidiary Agreements, the Five-party Agreements and the Off-Taker Agreements, among others.

He said the facility, which would shoot Ghana’s debt portfolio up to some 20 billion dollars, held serious implications for the economy.

The Minority said a tally of the total cost of projects to be financed by the loan amounted to $3.25 billion, with government expected to provide 15 per cent counterpart funding, which translated to $450 million making the total resource available to $3.45 billion, which showed an excess funding of $200 million, which was not accounted for in the loan document.

They also held that no commitments were imposed on the Chinese in the Off-Taker agreement that committed Ghana to sell oil through the Ghana National Petroleum Company to offset the loan, stating that the Chinese had no risk in the agreement.

They chided government for not carrying out due diligence and proper feasibility as to how much money was needed to implement the identified projects under the agreement and so have not been able to provide reasonable estimates, insisting that the gap in the quoted sums in the document was at variance with the actual project cost, stating that such “looseness” would create room for consultants and contractors to blow up the cost of those projects.

They noted for instance that the Coastal Fishing Habour and Landing Sites Project according to government required between 15 million dollars and 250 million dollars creating a gap of $100 million.

The Eastern Corridor Multi-Modal Transportation Project the request was $150 to $200 million with a gap of $50 million, while the Accra Metropolitan ICT-Enhance Traffic Project the request was $150 to $500 million, which had a gap of $350 million, indicating that such variance gave room for “corruption and fraudulent manipulation of the project cost and the nation will not have value for money”.

The Minority also raised issues with a clause in the MFA that granted a minimum of 60 per cent of the contracts to Chinese companies, registering displeasure that that arrangement could potentially hand the Chinese 100 per cent of the contracts without breaching agreement, arguing that that negated the local content policy being pursued by government.

“And this is a purely commercial loan, not a grant or even a concessional loan! We wanted government to renegotiate this to say a maximum of 60 per cent or even 70 per cent so that we could have a minimum of 30 per cent or 40 percent reserved for Ghanaians”.

They also demanded answers to why per the agreement, many of the projects are to be built, operated and transferred to Ghana, when government is funding the projects through a commercial loan, arguing that a contractor operates a project when the investment came from them.

The Minority leader said information available to the caucus indicates that even the gas project that had started in earnest had run into some challenges, with the Chinese halting work on it.

They said their request for the gas project to be brought to Parliament for scrutiny and approval had not been heeded in contravention of Article 181 (5) of the Constitution and thus served notice to the Finance Minister that he would be required in Parliament to answer why the gas project was being executed when the subsidiary agreement relating to the project had not been brought to Parliament.