Vision1 FM                       Light FM                         Light TV

Stop the confusion; $2bn bauxite deal is a loan – Minority insists

The Minority in Parliament is insisting that the $2 billion bauxite deal is a loan despite attempts by the government to make Ghanaians believe it is a barter arrangement that will not bloat the country’s debt stock.

According to the Minority, the agreement is similar to the $3 billion petroleum-based China Development Bank (CDB) loan agreement the country went for when it wanted to build its gas infrastructure.

The Minority insists that the mode which was supposed to be used to service the CDB loan is a similar model being used by the Akufo-Addo government for the current $2 billion bauxite deal adding that “if CDB arrangement is a loan arrangement, what makes Sinohydro arrangement a barter agreement?”

“The attempt to confuse the issues is understandable since the NPP vociferously rejected this structure while in opposition,” Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson argued in a statement issued on Tuesday.

 

The government has sealed an agreement with the Chinese government to sell Ghana’s bauxite to China’s Sinohydro Group Limited and in return receive $2 billion to undertake infrastructural projects in the country [Ghana].

 

However, some economists and the Minority in Parliament are opposed to the deal calling on the government to classify it as a loan.

 

The Minority subsequently petitioned the International Monetary Fund (IMF) over the issue seeking clarification as to whether the facility is a loan or not.

 

However, speaking at the 2018 edition of the Economic Forum last week, Vice President Dr. Mahamudu Bawumia insisted that the agreement is not a loan but barter.

 

He went on to give further information on how the agreement will be implemented.

 

Dr. Bawumia said Sinohydro wouldn’t be the same company mining the bauxite, “and they are not taking our raw bauxite.”

 

“I know Sinohydro is not a mining company. Rather the government, in our plans, has set up a holding company by an Act of Parliament, the Ghana Integrated Aluminum Development Authority, which will soon enter into joint venture arrangements with potential mining and aluminum refinery companies. The takers will establish bauxite mines and a refinery. We are going to have a situation where it will not be Sinohydro. Sinohydro will be providing the infrastructure, but Ghana will choose its partner to set up the Integrated Aluminum Development Industry in Ghana. The partners could be from the US, Australia, Canada or China,” Dr. Bawumia said at the forum.

 

“After mining and refining, the government of Ghana will then use her share of the refined bauxite to pay off whatever cost of the infrastructure provided by Sinohydro Corporation after a period of three years, on condition that Sinohydro would have completed the infrastructure projects that the people of Ghana have asked them to do. So it’s a quite different arrangement. We want to add value to our bauxite reserves which are around 900 million metric tons, worth about $50 billion in the market. If we refine this bauxite it could be worth almost $400 billion, and we are talking of using a two billion dollar facility to unlock all of this potential,” the Vice President added.

 

President Akufo-Addo , who was also in China last week re-echoed the same thing about government’s position on the $2 billion agreement not being a loan.

 

Ato Forson, who is also the Member of Parliament for the Ajumako/ Enyan/ Essiam Constituency and former Deputy Minister of Finance maintained in his statement that the deal is a loan because per the agreement brought to Parliament, “Sinohydro is borrowing from International Commercial Bank of China (ICBC) to fund the infrastructure projects for GoG [Government of Ghana], adding that “Sinohydro, therefore requested for a Letter of Support from the Government of Ghana as a Sovereign Guarantee.”

“With the letter of support, Sinohydro then assigns all its rights and obligations under the arrangement to ICBC. Is Ghana so unattractive in the capital market as to fall on a Chinese company to front for us in borrowing from the International Commercial Bank of China (ICBC) which we have done business with in the past?”

“Mr. Vice President, you and I know that in conventional practice, a Letter of Support as a Sovereign Guarantee is only required in loan transactions and not in barter arrangement.”

The MP noted that per the terms of the $2 billion agreement, the Ghana government is supposed to open an escrow account into which all future proceeds from the refined bauxite (our natural resources) will be paid into for the purposes of servicing the $2 billion debt.

“Also, the Government of Ghana is mandated to ensure that the escrow account has enough balances to settle debt service and repayment when due. The Government of Ghana is to top up any short fall for debt service and repayment. This totally contradicts the Vice Presidents claim that the government of Ghana will use her share of the refined bauxite to pay off whatever cost of the infrastructure provided by Sinohydro Corporation. Mr. Vice President, this is simply a supplier’s credit and cannot be so complex to comprehend,” Ato Forson added.

More Politics

Mahama Dragged To Amidu Over GH¢40m BOST Cash Mahama Dragged To Amidu Over GH¢40m BOST Cash 2018-09-17 - Centre for National Affairs (CNA), a pressure group, has petitioned...
Bank crisis: Your deposits are safe – UniCredit assures customers Bank crisis: Your deposits are safe – UniCredit assures customers 2018-09-13 - The management of uniCredit has called on its customers to remain...
NDC Organizer quits politics NDC Organizer quits politics 2018-09-13 - Younus Mohammed, who recently contested the election to become...
Name Foreign Ministry building after Kofi Annan - Minority in Parliament Name Foreign Ministry building after Kofi Annan - Minority in Parliament 2018-09-13 - As the nation pays her last respects to the memory of one of...
Photos: New sweet potato to be named after Kofi Annan Photos: New sweet potato to be named after Kofi Annan 2018-09-12 - The Crops Research Institute of the Council for Scientific and...

 

More News..

KOKROKO FOUNDATION DONATES TO TEMA PAEDIATRIC UNIT KOKROKO FOUNDATION DONATES TO TEMA PAEDIATRIC UNIT 2018-09-19 - Kokrokoo Charities Foundation, a non-governmental organisation...
QUALIFIED DOCTORS ,125 IN TOTAL HAVE BEEN NEWLY INDUCTED QUALIFIED DOCTORS ,125 IN TOTAL HAVE BEEN NEWLY INDUCTED 2018-09-19 - 125 medical and dental practitioners after passing the council...
Ghana On Target To A Stronger Economy – Bawumia Ghana On Target To A Stronger Economy – Bawumia 2018-09-19 - Vice President Dr. Mahamudu Bawumia In what appeared to be...
Minister Dissolves Prempeh College Board Minister Dissolves Prempeh College Board 2018-09-18 - The board of Prempeh College in Kumasi has been dissolved with...