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1 March 2012 | Business & Finance

Chinese Grabs Ghana Oil For 15 Years

Daily Guide

THE National Democratic Congress (NDC) is presenting the entire share of Ghana's oil in the jubilee field to one Chinese firm, UNIPEC Asia Company Limited, under the $3 billion Master Facility Agreement (MFA) signed between the Government of Ghana and China Development Bank (CDB).

A commercial agreement between the Ghana National Petroleum Corporation (GNPC) and UNIPEC Asia Company Limited has committed the country to supply 13,000 barrels of crude oil daily, which is the share of Ghana's oil in the jubilee field, to the Chinese for fifteen-and-a-half years to pay for the $3 billion loan.

The agreement was approved by majority decision in Parliament yesterday after the First Deputy Speaker, Edward Doe Adjaho, put the deal to vote amidst serious reservations expressed by the minority side.

The minority believed the deal was in violation of the Petroleum Revenue Management Act (PRMA) and a bad deal for the country.

The issue generated animated debates from both sides of the House during which the minority caucus, led by Osei Kyei-Mensah-Bonsu, strongly cautioned the Mills administration to hasten slowly on the deal, else it would come back to haunt the lawmaking-body and the entire country.

Just before the vote was taken on the deal, the minority leader went Biblical, cautioning, 'He who has ears let him hear and he who has eyes let him see and do the right thing'.

The Minority group could not fathom why the Mills administration would commit Ghana to pay $6.4 billion to Chinese for a $3 billion loan or give away 750 million barrels of the nation's crude oil to one company for 15 and-a-half years.

Members of the minority had raised objections to aspects of the agreement, indicating they were not questioning the benefits of the agreement but were simply pointing out some apparent defects in the deal for serious consideration.

For instance, under the tenure of the agreement, as presented in a report of joint parliamentary committee of Finance and Mines and Energy, Ghana was supposed to use the period to pay the $3 billion Chinese loan which, according to the minority group, was a complete violation of the PRMA.

That, according to former Attorney-General and Minister of Justice, Joe Ghartey, also the MP for Esikadu/Ketan in the Western Region, was in violation of section 18 (7) of the Petroleum Revenue Management Act, 2010 (Act 815), which stipulated that the nation's oil should not be collateralized for more than 10 years.

'Mr. Speaker, there is a contradiction between the law and the agreement. This is in violent violation of the law and it is unacceptable,' Mr. Ghartey submitted.

His submission was supported by some minority members.

Dr. Akoto Osei wondered why there was some haste in approving the deal when some relevant agreements, which were condition-precedent to the disbursement of the $3 billion Chinese loan, had not been approved by the House.

'Mr. Speaker, this could potentially come to haunt the House,' Dr. Akoto Osei warned.

However, a Deputy Minister for Finance and Economic Planning, Seth Terkper, told the House government was transparent in the management of the oil revenue and that the agreement was a better deal for Ghana.

According to him, proceeds from the sale of the crude were to be paid into the Petroleum Holding Fund in accordance with section 3 (1) of the Petroleum Revenue Management Act.

Mr. Terkper explained that it was only the debt-servicing amount from the Annual Budget Funding Amount (ABFA), as approved by Parliament that would be paid into a collection account for the repayment of the loan.

In a related development, Parliament yesterday approved an amount of $150 million for government to finance the ICT-enhance surveillance and enclave project under the Master Facility Agreement for the $3 billion Chinese loan.

By Awudu Mahama