Deputy Minister for Information, the Hon Kojo Oppong Nkrumah, has stated that the US$2billion Master Project Support Agreement (MPSA) that government signed with Sinohydro Group Limited of China is a unique project financing arrangement that will create equity between the country’s natural resources and infrastructural development.
He lamented that discovery of natural resources have not translated into equivalent infrastructural development even though approximately GH₡11.8 billion has been budgeted for that over the past 20 years.
The Deputy Minister was addressing the media on the Government and Sinohydro US$2billion infrastructural deal that Parliament approved before it went on recess.
According to him, some GH₡57 billion had been realized from mining and quarrying over the past decade with about 20% of that money budgeted for infrastructural development and yet that has not translated into any significant transformation.
He stated that the US$2billion MPSA is a barter agreement that aims to open up a new financing model for Ghana in undertaking future infrastructural projects.
The agreement, he said, was reached with Sinohydro Group Limited to provide US$2billion of infrastructure including roads, bridges, interchanges, hospitals, housing, rural electrification in exchange for Ghana’s bauxite.
He argued that the Agreement stipulates that Sinohydro finances the $2billion worth of infrastructure to be paid with $2billion worth of refined bauxite/alumina/aluminum without any interest payment.
He said, “Barter is a form of trading in which goods or services are exchanged without the use of cash.”
“A loan is a written or oral agreement for a temporary transfer of property (usually cash) from its owner (the lender) to a borrower who promises to return it according to the terms of the agreement usually with interest for its use.”
“This MPSA, therefore, cannot be described as a loan but a barter agreement.”
According to him, the barter payment period will commence after three years for a period of 15 years and explained that Ghana will only pay portion of the funds that are used and not the entire $2billion.
He indicated that the Bauxite will be mined and refined by Ghana integrated Bauxite and Aluminium Development Authority (GIBADA), which is a Joint Venture between Ghana and a nominated Chinese Company.
Phase I of the projects, Hon. Oppong Nkrumah indicated, in the sum of US$500 million would involve the construction of roads across all the ten regions while the Phase II, which is in the sum of US$1.5billion will also cover the entire country.
He disclosed that additional benefits to be derived from the deal are that the arrangement opens fiscal space in the budget to finance education and health among others and also creates a path to fulfill government’s Ghana beyond aid policy.
The agreement, he said, would also create jobs and open up the beneficiary sectors of the country for increased economic activity and at least 30% local content in the execution of the projects.
He noted that the Minority in Parliament opposed the deal with the argument that the agreement hides a supposed debt from Ghanaians but stressed that this is a barter agreement that leverages Ghana’s natural resources in their refined states to meet the infrastructural needs of the nation.
By Osumanu Al-Hassanfirstname.lastname@example.org