An international agreement that will see Ghana and China trade in bauxite in exchange for cash worth US$2billion has received the approval of the Parliament of the West African nation amidst concerns from some Members from the Minority Caucus.
This follows the adoption and approval of the report of the Finance Committee on the Master Project Support Agreement (MPSA) between the Government of the Republic of Ghana and Sinohydro Corporation Limited for an amount up to US$2billion for the construction of priority infrastructure projects.
The deal which is in the form of barter will enable the former British Colony raise US$2billion from China’s Sinohydro Corporation Limited to undertake various infrastructure projects that are aimed at bridging the country’s infrastructure deficit estimated at US$30billion.
Sinohydro Corporation Limited would in turn, receive refined bauxite in the form of alumina or aluminum over a fifteen-year (15-year) period (inclusive of a three-year grace period) from the Republic of Ghana.
Per the deal, thus the Master Project Support Agreement, the Government through the Ghana Integrated Bauxite and Alumina Development Authority (GIBADA) will establish a bauxite processing plant to process the raw bauxite into alumina before shipping same to service its obligations to Sinohydro Corporation Limited’s strategic partner (Offtaker).
Deferred Repayment
The Chairman of the Finance Committee, Dr. Mark Assibey-Yeboah, presenting the committee’s report to the plenary told Members that under the MPSA, the Chinese state-owned hydropower engineering and construction firm is responsible for arranging the project financing for all the priority projects subject to the mutual agreement of the parties.
Sinohydro, he added, “shall be solely responsible to enter into the financing agreement with any financial institution that agrees to provide the project financing.
Objectives
The objectives of the project, according to Dr. Assibey-Yeboah are to improve road infrastructure for enhanced intra-urban, regional and national road traffic flow, pursue rural electrification, affordable housing, fish landing sites, strengthen economic and regional integration and reduce the cost of doing business in the country.
Minority’s concern
Despite the deal coming in the form of a barter, the Minority National Democratic Congress (NDC) MPs contend that the cost involve will still add up to the country’s public debt stock which stood at US?142.3billion as at the end of 2017.
They were particularly, opposed to what they described as attempts by the Ministry of Finance to ‘hide the debt’ involved in the agreement.
Spokesperson for the Minority on Finance, Casiel Ato Forson, argued that describing the arrangement as barter would obscure what is in their opinion a debt that the Government is incurring under the agreement.
He told kasapafmonline.com on the sidelines of the parliamentary sitting that his side will surely go to court over the barter trade agreement.
Gov’t commits to using $2bn for infrastructure project
Addressing a news conference in Accra, Tuesday, July 31, 2018, over the deal, a deputy Minister for Information, Kojo Oppong Nkrumah said the first phase of the Ghana-Sinohydro deal comprising of US$500million will be used to undertake infrastructure projects across the country.
“Phase One of the project has been approved and construction will commence before the end of this year”, he noted.
These projects which include the construction of bridges, major highways, interchanges and landing beach sites, he noted, will commence before the end of 2018.
Phase two of the project, he adds, will involve the construction of hospitals and some other infrastructure projects across the country.
He further told the gathering that the deal has open up a new financing model for the country to undertake infrastructure projects in exchange of refined bauxite.
He said 30% of the entire project will be reserved for local contractors.