It has emerged that the 442 million Euros (US$585m) loan agreement presented to Parliament last month and yet to be approved for the provision of 200 ambulances and the construction of 12 district hospitals, is with a company in the Czech Republic, Opus 7, that deals in clay, stove lining and masonry cement.

Among the more than half a billion dollar loan deal with the Ghana Government, the clay-based manufacturer has offered to build 12 district hospitals at the cost of $40 million each. There are currently 70 districts in the country without district hospitals. The existing quality and capacity of district hospitals suggest that the loan facility, nearly $490 million of which are for the construction of hospitals, could put 70 district hospitals at a unit cost of $7 million or half the number at $14 million per district hospital.

This adds to the Danquah Institute's persistent argument that the cost of loan projects are hugely inflated and arranged to appear concessionary.

A due diligence report, commissioned by the policy think tank, Danquah Institute, and prepared by the world’s leading provider of commercial information, Dun & Bradstreet (D&B), reveals that the company, Opus 7, s.r.o, has its registered office in the Czech Republic and its postal address in Austria, with no track record in raising loans since it was formed in 1994.

The husband and wife company has a stated capital of 100,000 Czech Crowns (CZK), which converts into $5,263. Its annual sales, according to the D&B report, is not more than $10,528 (199,999 CZK).

It is 100 percent owned by Mrs Marie-Terezia Schauerhuber, with her 63-year-old husband, Ernst Schauerhuber as its Chief Executive Officer.

The report by D&B categorically doubts the capacity of Opus 7 to raise any meaningful credit to undertake any business venture. It reads, “The D&B maximum credit recommended for this business [Opus 7] is 100,000 CZK,” or $5,263. Yet, this is the company that is to supply Ghana nearly $600 million worth of loans in two tranches.

D&B goes on to show that there is no record of Opus 7 ever contracting any loan agreements in the past and there is no record of its current net worth.

Opus 7, which employs not more than five people, is classified as a “below average” company and therefore very risky for the Ghana Government to enter into any credit agreement with.

“The company did not even fill in their last financial statements at Registration Court”, as it is required to do, according to the due diligence report.

Indeed, its bankers could not be located anywhere: “No bankers of the company revealed,” the due diligence report states.

The 442 million Euros loan agreement between the Government of Ghana and Opus 7, s.r.o. Satov, Hnanice, Czech Republic, is also to finance the purchase of 2 air ambulances, 50 medical mobile clinics and 10 educative mobile vans.

The disclosure about the Mills-Mahama administration entering into a multi-million dollar loan with such a questionable company came to light last Saturday during a current affairs programme on Citi FM, an Accra-based radio station during a discussion on the much-ridiculed ‘Top 50 Achievements of the Prof John Evans Atta Mills-Led Government in His First Two Years in Office.’

Samual Abu Jinapor, an activist of the New Patriotic Party, criticised the Government for stating as a top achievement plans that it intends to implement. One of the examples he gave was, “Plans are advanced to procure 355 new ambulances...”

Both Richard Quashiga, the ruling National Democratic Congress’ Propaganda Secretary and the host of the programme, Richard Sky, stated that Parliament last month approved of the loan, so plans were indeed advanced in procuring the ambulances.

But, the Executive Director of the Danquah Institute, Asare Otchere-Darko, alias Gabby, did not share their optimism and called, instead for caution because both the IFC and CNTCI loans received parliamentary approvals before the controversy surrounding them came to light, forcing the NPP government to abandon them.

He also stated that the $1.5 billion STX deal, which the Danquah Institute believes is recklessly over-priced, by some estimated $800 million, shows that even where a loan ahs been approved, the lenders may find it difficult to raise the money. It is interesting to note that four months after parliament approved the STX loan for the construction of 30,000 housing units for the security forces, the signing ceremony to begin the project could only be scheduled for Tuesday, December 14, less than one week after parliament approved to the controversial clause which allows petroleum revenues to be used as collateral for loans contracted by Government.

Gabby disclosed, to the heckling objection of Mr Quashiga, that the Danquah Institute commissioned a due diligence report to be done on Opus 7 and that, “going by the findings of the report I find it very doubtful the capacity of this company to raise over 400 million Euros for any project in Ghana or anywhere else for that matter. But, of course, armed with a sovereign guarantee from an oil rich company many people are more than willing to try their luck,” Gabby said.

Opus 7 is demanding 11.2 million Euros as payment of the financing costs for the arrangement fees, management fees and commitment fees within 30 days of the loan’s approval, which falls on this week.

Thought the loan carries a 0.0% interest rate, in an interview with the Daily Guide, Gabby said, “that alone should raise the alarm bells. How is this private company able to attract a zero-rated interest and a so-called grant element of 74.82%? We should wise-up to this kind of financing craft.”

He criticised Parliamentarians for apparently failing in their important duty of ensuring financial scrutiny of bills and loans presented to them.

“Nowadays any loan charlatan can present an agreement at a highly inflated price and turn around to present to you cooked up figures to show that it is a concessionary loan because there is a so-called grant element vaguely calculated from a low interest rate which can itself be very high considering the inflated cost of the contract itself,” the DI head points out.

According to a memorandum sent to Parliament last month by Health Minister Dr Benjamin Kunbuor and Finance Minister Dr kwabena Duffuor, "the supply of the ambulance vehicles, mobile clinics and educative vans will be made in 6 monthly installments, starting about 5 weeks after the submission of a sovereign guarantee... The air ambulances will be delivered within 8 months from the date of submission of a soveriegn guarantee... The construction of the district hospitals will be done in two tranches."

However, the disbursement schedule itself puts the disbursement, of 75 million Euros, three months after the sovereign guarantee is submitted, with the last disbursement of the first tranche coming 32 months after the submission of sovereign guarantee.

According to the loan agreement before parliament, Tranche 1 will involve the construction of 8 of the hospitals. It "consists of a total amount not exceeding 255 million Euros. Of this total amount, 247,222,500 Euros is available for the total project costs and the remaining 7,777,500 Euros for the payment of the financing costs for the arrangement fees, management fees and commitment fees... Tranche 2 consists of a total loan amount not exceeding 112 million Euros for four district hopsitals. Of this total amount, 108,584,000 Euros is available for the total project costs and the remaining balance of 3,416,000 Euros for the payment of the financing costs..."

The disbursement of the second tranche for the four other district hospitals will also take 23 months.

The duration of the entire project is put at two years, but by this calculation it could take at least 3 years for the project to complete even if things go according to programme.

There are three separate loans with Opus 7, with two being the 367 million Euros $487.4m) of two tranches for the construction of 12 district hospitals. One is a supplier's credit agreement of 75 million Euros ($100m) for the supply 200 new ambulance vehicles, 50 unit mobile clinic vehicles, two used airlifted ambulances, training of personnel, 10 educative mobilve van with video wall unit and "provision of required infrastructure needed [sic] for the delivery of the above services."

Particularly, Ghana Government, "the buyer will not pay any interest on the amount of the loan disbursed and oustanding over the period of the loan." It is only on default of payment (late payment) that will attract a 2% interest on amounts due, calculated on compound interest.