The Minority in Parliament has maintained the $2 billion bauxite deal is a loan facility and not a barter arrangement as being purported by the government.
In a statement, the NDC Member of Parliament for the Ajumako/ Enyan/ Essiam Constituency in the Central region Cassiel Ato Forson said the arrangement being used by the Akufo-Addo led government is a 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.
Vice President Dr Mahamudu Bawumia, has indicated the decision by the Nana Akufo-Addo government to enter into a $2 billion Bauxite for Infrastructure barter arrangement with the Sinohydro Corporation of China is an example of the innovative, out-of-the-box thinking influencing the government’s approach to national development.
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.
This arrangement seeks to leverage a fraction of Ghana’s bauxite resources to address the infrastructure challenges and will provide a wide variety of projects including hospitals, bridges, interchanges, roads, affordable housing, rural electrification, and many others in line with government’s development agenda, government officials say.
But 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.”
He said 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 will be deposited for the purposes of servicing the $2 billion debt.
