Government accesses US$500m CDB facility
The government has accessed about $500 million of the Chinese Development Bank (CDB) loan of $3 billion, mainly to fund the construction of gas infrastructure projects at Atuabo in the Western Region.
The loan had been earmarked for a number of projects, including the refurbishment and upgrading of railway lines on the Western Corridor; the expansion of the Tema and Takoradi ports, construction of major road infrastructure in the Western, Eastern, Volta, Ashanti and Greater Accra regions, as well as the construction of landing beaches for the fishing industry.
A Deputy Minister of Finance, Mr Kweku Ricketts-Hagan, told the Daily Graphic that all knotty issues surrounding the CDB loan had been settled and various government agencies were preparing and designing projects to draw down on the remaining funds.
Majority of the funding released went to fund the gas processing plant being constructed by the Ghana Gas Company Ltd.
“Initially, we had issues with certain wordings in the master agreement which the Chinese government wanted changed. Now these have been settled with some subsidiary agreements. What we need now is for the projects to be designed to access the funds,” Mr Ricketts-Hagan said when he briefed the Daily Graphic on the preliminary budget hearings.
The Ministry of Finance normally holds the preliminary budget hearing to receive primary inputs from ministries, departments and agencies (MDAs) and also inform them about the fiscal position and intended direction of the government for the next fiscal year.
The hearings provide the first draft of projects and programmes from the MDAs and offers the opportunity for frank discussions among the Finance Ministry and the MDAs.
This year, the Finance Minister, Mr Seth Terkper, set up three hearing committees chaired each by himself and his two deputies, Mr Ricketts-Hagan and Mr Ato Forson, in order to hasten the process. The hearings are expected to end this week.
The loan attracts a 15 per cent counterpart contribution from the government for each subsidiary agreement amount.
The deputy minister discounted claims that the government had defaulted in providing counterpart funding to allow disbursement of the loan, adding that since the country’s oil production had been used as guarantee, the Chinese government was satisfied with it.
The Daily Graphic gathered that the government provided the counterpart funding for the loan from the Petroleum Revenues meant for budget execution that accrues to the country.
The Chinese Development Bank, the Daily Graphic gathered, had released full funding for the deployment of ICT Enhanced Surveillance Platform for the Western Corridor.
A total of $100 million from the CDB loan is expected to be channelled into the small and medium enterprise (SME) Projects Incubation Facility.
PRMA (Act 815)
According to the Petroleum Revenue Management Act, 2011 (Act 815), the funds meant for annual budget funding could be channeled into four priority areas namely expenditure and amortisation of loans for oil and gas infrastructure; road and other infrastructure; agriculture modernisation; and capacity building (including on oil and gas).
In addition, up to 70 per cent of the annual budget funding is to be used for public investment expenditures.
Funding the Atuabo Gas Processing Plant project is, therefore, within the law.
Mr Ricketts-Hagan emphasised that proceeds from the project alone were enough to retire the entire $3 billion loan, which is expected to be paid back within 15 years.