This was contained in a statement released by the think tank, after the Minister of Works, Water Resources and Housing, Hon Alban Bagbin, revealed that Government had now contracted Standard Chartered Bank and two other American Banks to fund the STX project.
According to statement, the Government of Ghana is currently playing an active role in going on an international road show with officials of STX sourcing for funds as against the original expectation that was to be the responsibility of STX and the Korean Government.
This new development, according to the think tank, raises fundamental issues about the terms and conditions of these purported new arrangements and the need for the three separate credit agreements (or singular agreement if such) to be brought to Parliament for their terms and conditions to be scrutinized for consistency with what was originally approved by the legislature.
When the New Statesman contacted Nana Attobrah Quaicoe, Head of Research at DI, he expressed shock at the fact that nearly 10 months after Parliament approved this controversial agreement Ghanaians are being now being told that Government is now sourcing for funds.
“Credit facility agreements are ordinarily not presented to Parliament for scrutiny and approval without an identified source(s) of funding and it is dangerously speculative and suspicious to present any such agreement with specific terms and conditions when sources of funding are yet to be identified. Indeed, such a practice compromises Government’s leverage to negotiate a good deal on behalf of the country and that is what we are afraid has happened in this STX case”, he said.
It is recalled that in September 2010, the Deputy Finance minister, Seth Terkper, defended the STX deal, claiming that the agreement came with identified sources of financing, including the South Korean government. However, this has proven not to be the case.
Nana Attobrah said the current problems being faced by Government in raising funds is a testament to the initial concerns raised by the Danquah Institute, Imani Ghana, World Bank, GREDA and the Minority in Parliament as regards to the integrity of the STX deal.
“At the time, we said that it was not proper and therefore highly suspicious for an agreement to have specific terms and conditions, including interest rates, percentage of grant element, percentage of management fees and insurance premium, when the actual source(s) of funding had not been identified and specified. We also raised issues about the US$264 million to be paid by the Government of Ghana as political risk insurance, which was slapped on the credit facility without an identified source(s) of funding”, he said.
This, in the view of Nana Attobrah, was highly unacceptable, inessential and extremely high for a country with Ghana’s credit rating and also exposed the many problems contained in the STX deal presented to parliament.
According to him, the political risk insurance was in excess of which Government was required to pay upfront per the agreement.
The DI man called on the Minister of Finance & Economic Planning to go back to Parliament for the House to properly scrutinise the terms and conditions of the agreement, if any, that have been reached with the three international banks that Mr Bagbin now claims have decided to fund the project.
“Parliament must satisfy itself with the consistency of the current state of the agreement with what it approved in August 2010 and to further satisfy itself on the current propriety of the exorbitant and inessential $264 million political risk insurance originally demanded by the Koreans”, he said.
In his recent attempt to explain the delay in construction, five months after President Mills cut the sod for the commencement of work, with not even a single shovel on any site, Mr Bagbin mentioned some preparatory works, including the identification of land, now being done and engineering and procurement details being finalised, all of which, as we argued last year, ought to have been done before any proper calculation of the estimated cost of the project could have been competently reached.
Last year, the Government of Ghana reached an agreement with STX of Korea, through its subsidiary in Ghana, for the construction of 200,000 houses in Ghana within a period of five years at a total cost of US$10 billion, and Parliament later in August last year approved an initial off-take agreement for the construction of 30,000 housing units for the security forces at a cost of US$1.5 billion.
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