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25.08.2011 Politics

War Over $3bn Cash

By Daily Guide
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THE MUCH-anticipated $3 billion loan agreement between the Government of Ghana and the China Development Bank (CDB) was yesterday laid before Parliament amidst sharp disagreements between the two sides of the House.

A joint committee on Finance and Poverty Reduction Strategy of Parliament, in its report, had by majority decision recommended the approval of the loan without the consent of the Minority.

According to the agreement, the loan facility would be repaid from the country's 'petroleum revenue and government's own other sources'.

Pursuant to the repayment of the facility, a commercial contract for the off-take of oil would be entered into by the national oil company, Ghana National Petroleum Corporation (GNPC) and the Chinese authorities.

The agreement is expected to be approved today but it is anticipated that there will be fireworks during the debate before the approval.

The report of the committee, which was signed by James Klutse Avedzi and Peace Fiawoyife, Chairman of the Finance Committee and Clerk to the Committee respectively, said, 'Majority of members of the committee agreed' that government's request asking the House to agree with the master agreement was in order and therefore the committee should recommend it to the House for approval.

However, the Minority members of the committee disagreed with the decision, especially with portions regarding subsidiary agreements in the whole deal.

DAILY GUIDE learnt the Minority lost when a vote was taken on the issue at the committee level.

Government had brought the Master Agreement without its subsidiary agreements but members from the Minority side argued that since the definition of 'facility agreement' included subsidiary agreements, approval of the facility would necessarily imply the approval of the subsidiary agreements which are not yet known.

They were also of the opinion that the approval of the Master Facility Agreement (MFA) was inextricably linked to the approval of the other requests and therefore it would be improper to approve the MFA without seeing the relevant subsidiary agreement.

The Minority suggested that the China Development Bank (CBD) should be given only a 'Letter of Comfort', otherwise the agreement should rather be treated as a Memorandum of Understanding and be approved to give government the green light to negotiate the subsidiary agreements and bring them back for approval in that context so that it would not constitute a binding contract.

The Majority side said the approval must be given to enable the subsidiary agreements to be negotiated and presented to the House for approval.

Again, since the terms of the agreement were not in question, approval should be given in accordance with the constitution.

They are asking for the approval because 'members of the committee were of the opinion that the projects earmarked for funding under the facility are critical to the nation's development, especially the gas infrastructure development'.

Parliament was recalled from recess to consider the multi-billion dollar credit facility from the world's most populous country.

The ruling NDC indicated that it would use the cash to 'finance Infrastructural Development Products under the Ghana Shared Growth and Development Agenda (GSGDA)'.

The loan, the governing NDC indicated, would be used to finance a number of infrastructural projects, including the Eastern Corridor roads and Accra Plains irrigation project and for national security.

However, there has not been a proper breakdown of the component beneficiaries of the facility.

According to Asare Otchere-Darko, Executive Director of Danquah Institute (DI), this was the first time that a long list of project financial deals had been boxed under one agreement and presented without any details of the specific projects involved, with Parliament being asked to endorse them for the Executive to go and negotiate the details with the lender.

'We think it is a dangerous precedent which Parliament ought not to allow. What Parliament is being asked to do is to simply give its approval to a Chinese credit line of $3 billion and leaving the rest, the essential details that will determine the financial prudence of the transactions, for the Executive to handle,' he said in a statement.

By Awudu Mahama

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