General News of Friday, 15 December 2017
Parliament has approved an $88 million facility agreement between the government and the Industrial and Commercial Bank of China Limited (ICBC) to finance the supply of electrical materials and equipment to five selected regions in the country.
The materials and equipment are for the electrification of 1,033 communities in the Ashanti, Brong Ahafo, Eastern, Volta and Western regions under the Self Help Electrification Project phase one.
The approval followed the presentation of the report of the Finance Committee on the facility and subsequent contributions by the Members of Parliament (MPs) on the facility.
Terms and conditions
Under the agreement, $82.4 million is for the contract and $5.6 million as the China Export and Credit Insurance Corporation (Sinosure) premium.
The loan has a re-payment period of 11 years, a grace period of four years and 15 years maturity.
It has an interest rate of a plus margin of 0.5 per cent per annum, management fee of 1.50 per cent flat and a commitment fee of 1.0 per cent flat.
Presenting the report of the Finance Committee, its Chairman, Dr Mark Assibey-Yeboah, said the Sixth Parliament approved by resolution a credit agreement of $90.4 million between the government and ICBC for the same project.
He added that the Sixth Parliament also approved a commercial agreement of $97 million between the government and Sinosure for the supply of electrical materials and equipment for the electrification of 1,033 communities in the five selected regions.
Dr Assibey-Yeboah explained that upon the signing of the agreement, the Sinosure premium was reduced from the estimated $8.0 million as approved by Parliament to $5.6 million, thus, bringing the entire credit amount down to $88 million instead of the original $90.4 million.
“The need has, therefore, arisen for the parties to execute an addendum to the original agreement to reflect the reduction in the credit facility amount,” he said.
He further explained that the commercial agreement of $97 million between the government and Sinosure for the supply of electrical materials and equipment for the electrification of 1,0333 communities in the five selected regions still remained the same.
Dr Assibey-Yeboah indicated that the committee was informed by officials of the Ministry of Energy that the estimated cost of electrification of the entire 1,033 communities was $200 million.
However, he said, due to inadequate funds, the project had been divided into phases and that phase one being funded by the $88 million would benefit exactly 495 communities across the five selected regions.
The Ranking Member on the Finance Committee, Mr Cassiel Ato Forson, said the saving of about $2.3 million in the facility agreement was laudable.
He expressed concern that the commercial agreement accompanying the loan agreement did not come before Parliament for consideration.
The MP for Adansi Asokwa, Mr Kobina Tahir Hammond, suggested that the re-approval of the facility agreement amounted to a rescission of the decision of the Sixth Parliament by the current Seventh Parliament.
But that suggestion was countered by the Second Deputy Speaker of Parliament, Mr Alban Bagbin, the Majority Leader, Mr Osei Kyei-Mensah-Bonsu, and the Minister of Monitoring and Evaluation, Dr Anthony Akoto Osei.
Mr Bagbin said the figures in the earlier agreement came down because the county’s political risk had improved.
He added that the revision needed to be in tune with current realities.
Mr Kyei-Mensah-Bonsu stressed that besides the dwindling of Ghana’s political risk, the country’s credit ratings had improved.
He was of the opinion that, it was the combination of the factors that had resulted in the reduction in the loan facility, and indicated that the revised amount required a Parliamentary approval.