Alarm blow over $850m gas project

The Minority New Patriotic party (NPP) in parliament has queried the governing National Democratic Congress (NDC) for going ahead with the $850 million gas processing plant at Atuabo in the Western Region in violation of the country's laws, as there was no parliamentary approval for the project to commence.

Minority Leader Osei Kyei-Mensah-Bonsu, who raised the concern on the floor of Parliament yesterday, said even though the project was necessary for the development of the Jubilee Oil Fields and the country, fast-tracking it without parliamentary approval was illegal.

Though Parliament is aware that the gas project is estimated at $850 million, Dr. George Sipa-Yankey, at a press conference last Thursday in Accra, said it would involve $750 million.

Ghana National Gas Company (Ghana Gas) had engaged a Chinese firm, Sinopec Corporation, after it signed a project implementation agreement with it in mid-November last year for the latter to pre-finance and undertake the Engineering Procurement, Construction and Commissioning (EPCC) of the multi-million dollar gas processing plant with parliamentary approval.

Mr. Kyei-Mensah-Bonsu did not understand why SINOPEC had moved to sit to execute the project without Parliamentary approval.

However, Minister for Communications Haruna Iddrisu argued that government did not need to bring the deal to Parliament because it was part of the Master facility Agreement ( MFA) between the Government of Ghana and China Development Bank for the $ 3 billion loan which Parliament had already approved.

He said the Finance Committee of Parliament had also examined the subsidiary agreement of the gas project, stressing that Parliament ought not to scrutinize every economic transaction by government.

But the Minority Spokesperson on Finance, Dr. Anthony Akoto Osei, pointed out that the MFA agreement had been modified because Sinopec was pre-financing the project, which is considered a different loan.

He quoted Article 181 (5) that “This article shall with the necessary modifications by Parliament, apply to an international business or economic transaction to which the government is a party as it applies to a loan”.

Board Chairman of the Ghana Gas Company, Dr. Kwesi Botchwey, denied assertions that Sinopec engineers for the Ghana gas project would not execute it on time because of awarding any contracts; we have no hands in selecting who is going to lay the pipe, who is building the pipes and all that”.

“We signed an engineering procurement construction and commissioning contract with Sinopec who are a world class company and I know there are many prejudices against Chinese firms, especially from people who frankly don't quite know the Chinese company they are talking about. It's a world class company who has laid thousands of pipelines the world over. And importantly we insisted that we want world class facilities, they were particularly sensitive about the perception that people have of them.

“So even in areas where they have the capacity to manufacture the things themselves, they said look we will get you international companies to do it, so the gas processing facility which they could have manufactured themselves is being done by a Canadian company”, Dr. Botchwey stated.

However, there are suspicions that SIPSC, a subsidiary of Sinopec, has abnormally priced imported equipment, which are supposed to be used for the construction of the LPG processing plant at Atuabo in the Western Region.

According to valid sources and some documents from the Ghana National Gas Company Limited (GNGCL), the inferior equipment which had a liquid recovery capacity of 46 per cent had been overpriced by $140 million, while other quality ones with a liquid recovery level of 85 per cent were offered at lesser prices.

Pundits had indicated that the deal was not subjected to Parliamentary approval before endorsement, laying credence to the suspicions.

Even though Daily Guide tried to reach the Ghana Gas Company, there was no positive response.

It has also emerged that the quality plant would have engendered more revenue daily by $100 million yearly. Additionally, the superior equipment would have provided a lower operating cost than the ones which have been ordered now.

The superficial water pipelines to be installed by SIPSC will cost about $1.6 million more per kilometer than the deep water pipeline installed by the Ghana National Petroleum Corporation (GNPC).

It is feared that the shallow water pipelines will not meet the international technical quality requirement.

It is believed SIPC has over priced the materials by imposing more costs, in collaboration with its subsidiary off-shore firm known as SAF Petroleum Investments (FZE) registered in Dubai.

SAF, by the deal, is expected to make the initial procurement and resell the items to SIPSC.