Minority raises issues with Chinese loan again

BY: Enoch Darfah Frimpong

Osei Kyei-Mensah-Bonsu - Minority LeaderThe Minority in Parliament has revisited the $3 billion Chinese Development Bank (CDB) loan and reminded the government that most of the issues raised against the management of the acquisition of the facility remain unresolved.

It issued the reminder at a news conference in Accra yesterday, against the backdrop of the recent engagement of the press by the Minister of Information and Media Relations, Mr Mahama Ayariga, at the Flagstaff House.

According to the Minority Leader, Mr Osei Kyei-Mensah-Bonsu, during the engagement, the minister stated that the government had now sorted out every relevant documentation to pave way for the amount to be acquired.

Addressing the news conference, the Minority Leader explained that it was the Minority Caucus that called for caution and better due diligence to be conducted before Parliament approved the facility

“We were ignored and the ruling party, using its greater numbers, railroaded the agreement through Parliament,” he said.

He said two years later, one would have expected the government to do serious introspection, but that had not been the case.

Mr Kyei-Mensah-Bonsu recalled that when the Minority held a press conference on September 27, 2011 on the loan, it argued that the intentions behind the facility were good but questioned the terms and conditions of the contract and conceded that many of the projects to be covered by the loan were worthwhile for the country.

Giving further details on the facility, he said the first schedule of the master facility agreement (MFA) for the loan required the government to show evidence that Parliament had approved and authorised the government’s entry into the finance documents.

He explained that the principal finance documents included the subsidiary agreements, the five party agreements, the off-taker agreement, among others, which were all international economic transactions which Parliament was obligated by some provisions of the Constitution to approve.

Mr Kyei-Mensah-Bonsu said it was also logical that representatives of the people, on whose behalf the loan was contracted, were made to see and approve of those documents before the government contracted the facility.

He said although the total listed projects to be financed by the loan amounted to $3.25 billion, the loan was $3 billion, while the government was to provide counterpart funding which amounted to $450 million.

“Therefore, the total resource in the envelope comes to $3.45 billion. Therefore, there is an excess funding of $200 million which was not accounted for,” he claimed, adding that the Cabinet memo did not mention it either.

Mr Kyei-Mensah-Bonsu said the Chinese requested that Ghana commit to sell oil through the GNPC to the Chinese off-takers to offset the loan, while no commitments were imposed.

“That is why we pointed out that the ills of the STX agreement were being re-imposed on the state, whereas, just like the STX agreements, the Chinese counterpart had virtually no risks. As we speak, those concerns have not been mitigated,” he said.

He also said the Minority’s concern over the conduct of proper feasibility studies on the projects involved in the loan had also not been addressed, adding that in the agreement, the coastal fishing harbours and landing sites project had been quoted as requiring $150 million and $250 million, respectively.

For the Eastern Corridor Multi Modal Transportation project, the price quoted was from $150 million to $500 million, while the Accra Metropolitan ICT-Enhanced Traffic Management project was quoted from $150 million to $250 million.

Mr Kyei-Mensah-Bonsu contended that while the three projects could have been executed with $450 million, the government used the price ceilings and came up with $950 million.

“The looseness of such broad banding certainly will create room for consultants and contractors to inflate the cost of the projects. Manifestly, this arrangement will create space for corruption and fraudulent manipulation of project cost and the nation will not have value for money,” he contended.

He also accused the Minister of Finance of having raised bonds to pay contractors for some projects covered by the loan.

He named the projects as the Accra Metropolitan ICT Enhanced Traffic Management project, aspects of the Nsawam road, the Dodowa road and the La Beach road.

Mr Kyei-Mensah-Bonsu said although the minister ought to have sought the approval of Parliament before entering the bond market to raise funds, that was not done.

He said as of now, information available to the Minority was that the gas project was the only one that had started in earnest, adding that even that one had run into some challenges and work had halted.

The Minority Leader said the request for the gas contract to be brought before Parliament for scrutiny and approval had thus far not been heeded to, saying that was in obvious contravention of Article 181 (5) of the Constitution.

“We hereby serve notice to the Minister of Finance that he will be required to be in Parliament to answer why the gas contract is being executed but the subsidiary agreement relating to the project has not come to Parliament,” he said.

Story: Emmanuel Adu-Gyamerah