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General News of Wednesday, 11 December 2002

Source: Insight

Kufuor To Get New Presidential Jet?

There are very strong indications that the Kufuor administration is considering the purchase of a new and bigger Presidential jet. The new jet which may be bought under the same arrangements, used to buy the Gulf Stream III aircraft in the NDC era may have between 30 and 40 seats.

The INSIGHT claims to have sighted documents confirming that the issue of buying the new presidential jet has been raised by the HSBC, which provided the loan for the purchase of Gulf Stream III.

They have suggested that the two presidential jets, the Fokker 28 and the Gulf stream III should be sold to raise the money for the purchase of the new presidential jet.

The HSBC however maintains that in the aftermath of the September 11 attack on the US, aircraft prices have gone own and therefore Ghana may not get much from the sale of the two planes. HSBC recommended that the government of Ghana should use the same arrangement used to buy the Gulf Stream III in the purchase of the new presidential jet.

It is interesting however that the report of a four-member committee set up by government to go into the purchase of the Gulf Stream III jet has not been made public.

Former Finance Minister, Kwame Peprah who was at the centre of the purchase of the presidential jet has said that he did not do anything wrong.

We publish below the details of a letter written by officials of the HSBC to the Finance Minister, Yaw Osafo-Maafo (MP):

“RE: Proposal for the acquisition of a 40-seat government aircraft

We understand the government of Ghana is considering acquiring an aircraft with capacity of up to 40 seats (replacement aircraft). We understand further that it is the wish of the government of Ghana to dispose of two current owned aircraft, namely, a Gulf Stream and a Fokker as part of the process.

HSBC is pleased to indicate that in principle we are very happy to provide assistance in the purchase of a replacement aircraft and in the disposal of the two currently owned aircraft.

This assistance would initially take the form of establishing with your goodselves important information covering details on the Fokker aircraft, establishing the likely disposal proceeds from the sale of the two aircraft, the budget for the replacement aircraft, the amount of additional finance that will be required, and the security that may be available to support such financing.

From example, a new 40 seat aircraft could be in the order of US$40 million. However, a good mid-aged version of the popular and reliable Boeing 737 with a newly refurbished interior offering a 30 to 40 seat configuration could be purchased for considerably less.

It should be noted that a separate specialist aircraft brokers would undertake the actual process of identifying potential aircraft for purchase and the disposal of the Gulf Stream and the Fokker, as is the market practice.

This will mean separate arrangements covering disposal, purchase and subsequently finance will have to be put in place. However, HSBC will be pleased to offer advice in selecting and dealing with a broker.

Additionally, as before HSBC will offer assistance in all communication between the selected broker and the government of Ghana.

Mrs. Apenteng has informed us that utilization of the funds security account represents the least favoured option of the ministry and we strongly recommend that the ministry consider Option 1 or 2 at this time. The direct settlement of the payments by the ministry finance will serve to maintain the simplicity of the transaction and remove any potential encumbrance to the sale of the aircraft.

We are aware that the government of Ghana is currently reviewing with the donor nations the possibility of accepting Heavily Indebted Poor Country debt forgiveness. You will appreciate that the financing structure arranged for the Gulf Stream III aircraft is obviously outside any such arrangement, which may be agreed to cover bilateral government debt.

We look forward to working closely with the ministry over the coming weeks with regard to the sale of the Gulf Stream and possibly the Fokker aircraft. Please do not hesitate to contact us if you require any further clarification on the issues outlined above.

Yours faithfully,
M Bailey Director

R.J. Hodder
Assistant Manager Project and Export Finance”