Costly Pursuit Of US$3bn CDB Loan: Mahama Gives $6m For Chinese Fried Rice

President John Dramani Mahama has provided $6 million (GH¢23m) to cater for the expenses of his Presidential Special Task Force set up to “pursue the release of the outstanding balance of $2 billion” from the controversial $3 billion Chinese loan.

According to a Cabinet Memo in possession of the Daily Statesman, the $6million covers three main cost components, with the areas of expenditure listed to include “Catered breakfast for Ghana team and visiting guests at negotiating venue; catered snacks for day-long meeting breaks; catered lunch for Ghana team and visiting guests as (sic) negotiating venue; courtesy dinner for visiting CDB team upon closure of negotiation meetings.”

Chinese fried rice is the most popular food served for lunch and dinner in a typical Chinese restaurant, while among the popular snacks is prawn crackers.

Membership of the Presidential Task Force, which is currently in China, consists of Ato Ahwoi (Chairman), Amarquaye Armar (Vice Chairman), Cassiel Ato Forson (Deputy Minister of Finance, member), Ambassador William Ntow Boahene (member) and Ambassador Anani Demuyakor (member).

Other important areas of expenditure for the Task Force’s travel to Beijing include “Hotel costs in Beijing for team members, as well as per diem for subsistence (DSA); Local Beijing in-city transportation for team from Hotel to CDB scheduled events or trips, comparable projects familiarization visits, etc., that tends to be mandatory in the course of negotiation visits.”

The mandate of the taskforce is principally to see to the release of the $2 billion. They are to first of all see to the release of the $500 million for the three projects already agreed and also for the release of the remaining $1.5 billion, which, according to a May 2016 ‘Decisions Memorandum’, “The President would determine the utilization of the $1.5 billion that will remain after the commitments above are made.”

It was in March 2016 that the President agreed to pay the amount of $6 million. He instructed that the Ghana Infrastructure Fund should be responsible for “the funding of the work of the Task Force established by the President to pursue the $3 billion loan, and as a consequence of GIIF taking over GoG obligations, for GIIF to allocate an amount equivalent of $6 million to fund the work of the Task Force.”

Meanwhile, the there is no sure sign that the Chinese will agree to reactivate the Chinese Development Bank facility.

In October 2015, the President set up the Task Force “to re-engage CDB with the aim of utilizing the remainder of the US$3 billion CDB loan.”

The $3 billion commercial loan was hastily signed, against the advice of the Parliamentary Minority, under a master Facility Agreement between the Government of Ghana and the CDB on December 16, 2011, following parliamentary approval in July 2011.

Since then, $1 billion has been released. $850 million was used for the Ghana Gas project in a deal that was awarded to Sinopec, a Chinese firm, without a competitive tender.

In addition, a whopping $150 million was also awarded to the Chinese to install “IT Enhanced Surveillance Project to provide aerial security for the oil and gas enclave in the Western Region.” Experts say the entire ICT infrastructure could have been done with $50 million, if it was not sole-sourced.

The agreement meant Ghana allowing the Chinese to lift 13,000 barrels of the country’s share of crude oil from Jubilee Fields everyday. Even then, the Chinese saw that as insufficient.

The hastily signed facility, as was warned by the opposition New Patriotic Party, suffered persistent disagreement between GoG and CDB, with the Chinese refusing to release any more funds.

Finally in 2015, the Mahama Cabinet approved a recommendation to reduce the facility to $1.5 billion to cover the two projects already under development and three, pending subsidiary agreements.

The three were: (1) spending $200 million to build just 12 fishing landing sites, (2) using $100 million in a dangerously discretionary manner as loans for SME Projects Incubation and (3) spending another $200 million on a scheme described as ‘Accra Intelligent Traffic Management Project.’

However, CDB did not agree to the Cabinet decision and refused to disburse any funds beyond the $1 billion.

“When Cabinet’s decision was transmitted to CDB, CDB in turn decided to reduce the facility to US$1.0Billion to cover the two projects that were under development, and crystallize it at that amount, as in the CDB’s opinion, the 13,000 barrels per day of crude oil that GoG had committed to the repayment of the Facility was not even sufficient to support the repayment of the committed US$1.0Billion,” a Cabinet Memo signed by Finance Minister Seth Terkper discloses.

Several other offers from the Ghana Government in 2014 went unheeded, until last year when Government saw a glimmer of hope, leading to the set up of the special Task Force.

The Mr Terkper confirms this in his memo to Cabinet: “At a meeting in Beijing in July 2014, GoG offered other resources such as LPG for CDB consideration; however, this was turned down by CDB. In April 2015, however, CDB by letter dated 30 April 2015, informed GoG that they would consider the suitability of LPG only after their own due diligence to determine its suitability as security for repayment of the Facility. Further communication between GoG and CDB stalled at that point, until the appointment of the new Presidential Special Task Force, which revived discussions with CDB on the outstanding issues.”