Business News of 2014-05-22

$3bn CDB loan now dead?

-As Chinese make more outrageous demands
Aside the nearly $800 million out of the $3 billion disbursed by the China Development Bank (CDB) mainly for the Gas Infrastructure Project, the Chinese authorities are said to be reluctant in releasing the rest of the money advanced to Ghana.
The CDB and their Chinese government believe that apart from the said gas project, the other projects to be funded by the loan are not productive.
Again, they are not convinced with the preparatory works from the Ghanaian authorities to receive the remaining amount for those projects.
Therefore the Chinese are fretful of the safety of their investment, hence the decision to dither on the disbursement and give almost impossible conditions to the Ghanaian authorities.
Their strategy is to frustrate the cash-strapped Ghana Government (GoG) into backing out of the deal.
After agreeing to wave the about $100m in commitment fees on the undisbursed facility, authorities of CDB are said to be making other outrageous demands on Ghana government if they have to further release any money.
While the Master Facility Agreement (MFA) covering the CDB loan which was signed on December 16, 2011, required that the bank disburses the full amount in three years in three tranches for the 12 infrastructural projects earmarked, it took the Chinese about three years to release a paltry $600m to Chinese contractors working on the Gas Infrastructure Project at Atuabo in the Western region.
Even with that, they never ceased to twist government of Ghana’s arm to cough up commitment fees on the loan, until its waiver recently, following President John Mahama’s “diplomatic protest” to the visiting Chinese Foreign Affairs Minister early this year.
While a deputy Finance Minister, Kwaku Ricketts-Hagan would not confirm the other things the Chinese are further demanding, The aL-hAJJ sources both in Accra and Beijing say the Chinese authorities are making all manner of demands they know Ghana cannot meet in order to find an alibi for not releasing the rest of the money.
Mr Kwaku Ricketts-Hagan yesterday revealed to Citi Business news that ‘they are asking for other things I cannot tell you, but they want more; that is why we have returned to the negotiation table'.
A total sum of US$ 3 billion is expected from the China Development Bank, but as at January this year only $600 million of the loan had been disbursed.
About 12 key projects including the Gas processing plant, Western Corridor railway line and Accra Plains irrigation projects are hinged on the facility.
Some economists and financial analysts have called for the loan to be renegotiated.
But there are reports that China is demanding more oil; an additional 2,000 barrels of crude oil to the earlier 13,000 barrels a day agreed between them and government.
Though he will not confirm the oil demands, Kwaku Ricketts-Hagan told Citi Business News that the Chinese are currently making more demands.
‘We signed the agreement, but there were some commitments that we were to adhere to and we are doing that, but they are asking for other things- it could be oil it could be other things; but I cannot tell you more but they are issues on interpretation of the contract and that is why we have returned to the negotiation table, but certainly the two parties are not happy’.