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22.02.2007 Business & Finance

$25m seed money for Bui City

By The Statesman
$25m seed money for Bui City

The Minister of Finance & Economic Planning,Kwadwo Baah-Wiredu has disclosed that $25 million will be readily available as seed money for the proposed integrated Bui Dam and Bui City project.

The $600 million project is funded mostly by the Chinese government, and will be executed by China's largest hydropower engineering firm, Sino-Hydro, using a largely Chinese labour force.

Speaking exclusively to The Statesman, Kwadwo Baah-Wiredu said the development of the city project preferred by Government will also involve the Chinese and the Ghanaian private sector.

Sounding buoyant, he said, "Where opportunities abound, we must be courageous enough to use them.”

He sees the Bui integrated project as “an opportunity for the private sector in education, housing, food- processing, fishing, manufacturing and services of all kinds, from eco-tourism to communications, because of the strategic location of Bui.”

The area cuts across two regions (Brong Ahafo and Northern) and it is close to La Cote d'Ivoire.

Engineering, procurement and construction have been priced at $600 million, including $25 million for re-settlement of the displaced inhabitants, numbering about a thousand people.

Construction is expected to begin between three and four months time.

The financial proposal on the table now is for the Chinese Government to provide 85% of the funding, with the Ghanaian Government taking care of the remaining 15%. “But, we have since proposed to the Chinese to take 90% of the cost.”

42.5% of the Chinese loan will be concessionary, attracting a maximum interest rate of 2% with at least a 20-year repayment period, to be provided through the country's Ministry of Commerce.

However, the Kufuor Government is pushing all the way for a 1% interest rate and a 30-year repayment schedule.

The non-concessionary part, to be provided through the Chinese Exim Guaranty Bank, is for 12 years and has a grace period of 5 years and 1.1% over Commercial Interest Reference Rates, which hovers around 5.75% for US dollar loans with a maturing period of over 8.5 years. Yet, the Ghanaian Government wants this revised from 12 years to 15 years redemption period and the interest rate reduced to 1.05% over CIRR.

Meanwhile, the Bui Dam Secretariat has announced four-year plans to turn the area around the proposed Bui Dam into a township, using the creation of a new dam as a tool for development.

“The idea came about from previous projects in China,” said Executive Secretary of the project G D Boateng, who said that a similar plan has also worked in Brasilia, the entirely planned capital of Brazil.

'Dam towns' in the United States, such as Beaver Dam, have provoked a great deal of hometown pride and economic benefit.

If done well in the right environment on a manageable scale, this new breed of dams can be embedded into features of natural beauty and provide employment to locals beyond the construction phase.

The fear with Bui Dam remains what it has always been, that the magnitude of this project will overwhelm the local environment and have disastrous consequences for flora and fauna, including people.

According to Mr Boateng, the environmental concerns have been addressed in a government impact assessment by the Environmental Protection Agency, with input from “a local NGO with international connections,” the name of which he would not reveal.

This newly packaged project is a revival of an old Nkrumah idea that got scrapped during his 1966 overthrow, and scrapped again in 2001 due to a shortage of available financial resources, when it was rejected by the World Bank and other multilateral lending agencies.

According to Mr Boateng, the project will be completed in four years, including final planning and design touches, and will generate 400 megawatts of energy or a thousand gigawatt hours.

The Bui Dam project has been contentious ever since it was last reinvigorated in 1998 by the NDC.

During the four years it remained a twinkle of hope for Ghana's energy-thirsty, it was at the same time lambasted repeatedly by environmentalists and human rights activists because it would put nationally protected land and rare flora and fauna underwater.

That controversy remains today. George Ahaji of Green Ghana is not convinced that such a large hydro project can be implemented without severe detrimental impact.

“We don't need mega-dams,” he said, adding that a series of small, local dams providing power directly to local communities makes more economic, social, and environmental sense.

“Dams have social and environmental consequences,” he said. “In most cases those who are displaced are not put where they can adjust. In the new place they face more social and economic challenges.”

Environmentally, Mr Ahaji said that dams tend to irrevocably change the landscape and its flora and fauna. “With dams,” he said, “economic considerations too often take priority over other considerations.”

But, the Finance Minister insists that in going ahead with this project Government has made a conscious and responsible effort to balance the power potential of Bui and the need to protect the ecology of the area.

This he said has informed the revised integrated approach, which combines the construction of a dam with a city and an eco-tourism infrastructure.

Yet, according to the Carnegie Council, an American NGO dedicated to ethical international policy, “the dam will flood nearly a quarter of the Bui National Park [sic] and have profound effects on the environment.

Only about 400 hippos survive in Ghana; over 80% of which live at Bui, and it would be almost impossible to move them to another sanctuary as proposed.”

The International Rivers Project adds that the project would be “forcibly resettling 2,600 people and affecting thousands more.”

Writer and activist Mike Anane has uncovered that the people in the nearby Battor area were among the 80,000 relocated when Akosombo was built.

Most still lack their own electricity and many were never compensated for the loss of their land.

Mr Baah-Wiredu says the Akosombo experience would not be repeated at Bui. He said the Akosombo Dam construction 40 years ago did not envisage a city being created around the project in thirty years time.

This, he said, reduced the quality of the resettlement package offered to the displaced people at the time.

Bui would be different and would, instead, serve as part of Government's programme to spread development beyond the traditional cities of the colonial period.

In response to economic and environmental pressures the Bui project was shelved in late 2001.

At the time, Government announced that the project was not the best way to meet immediate energy needs, and that lower cost options were available.

Indeed, private sector operators from South Africa and Europe were invited to the site, who could only conclude that the project was far from being bankable, requiring an updated and comprehensive feasibility study before the proposed build-operate-and-transfer option could even be considered.

“One can no longer assume that hydropower generation is cheaper,” said Charles Wereko-Brobby, Chief Executive of the Volta River Authority at that time.

He asserted that thermal and gas sources of power were half the price of the Bui.

Findings that Bui hippos can be moved to Wichau sanctuary are also hotly debated and have been called misleading to the public.

On the other side of the environmental debate, some wildlife experts have claimed that hippos could thrive in the Bui reservoir if its size were kept relatively small. However, relocating these dangerous three-tonne beasts would be difficult and costly.

Another leading conservationist in Ghana, John Mason, has argued that the hippos are the “least threatened species at Bui,” saying that they will likely migrate away on their own once construction begins.