The New Statesman can disclose that the 442 million Euros (US$585m) loan agreement presented to Parliament recently by the Mills-Mahama Cabinet for the provision of 200 ambulances and the construction of 12 district hospitals, is with a company from the Czech Republic, Opus 7, that makes clay.
Clay is the product locally used for the manufacturing of the black grinding pot or brown water cooler. On top of that, due diligence report values the company at $5,000.
With this more than half a billion dollar loan deal with the Ghana Government, the clay-based manufacturer has offered to build 12 district hospitals at the cost of $40 million each!
Analysts fear the price is highly inflated and smacks of grand corruption.
There are currently 70 districts in the country without district hospitals. The existing quality and capacity of district hospitals suggest that the loan facility, nearly $490 million of which are for the construction of hospitals, could put 70 better equipped district hospitals at a unit cost of $7 million or half the number at $14 million per district hospital.
This is yet another evidence of growing allegations of the highly inflated nature of contracts under President JEA Mills, since the STX deal set a new standard.
For example, in 2010, a 6-unit classroom block costGH¢222,730 in the Greater Accra Region and GH¢261,000 in the Ashanti Region.
Yet, two year earlier, in 2008, a similar 6-unit classroom block was costingGH¢80,000. That translates into an inflated price of some 226%!
This adds to the growing perception that the cost of loan projects are hugely inflated and only arranged to appear concessionary, while accelerating Ghana’s return to HIPC status.
DUN & BRADSTREET
On the clay maker’s loan, a due diligence report, commissioned by the policy think tank, Danquah Institute, and prepared by the world’s leading provider of commercial information, Dun & Bradstreet (D&B), reveals that the company, Opus 7, s.r.o, has its registered office in the Czech Republic and its postal address in Austria, with no track record in raising loans since it was formed in 1994.
Apart from clay, it also manufactures stove lining and masonry cement.
The husband and wife company has a stated capital of 100,000 Czech Crowns (CZK), which converts into $5,263. Its annual sales, according to the D&B report, is not more than $10,528 (199,999 CZK).
It is 100 percent owned by Mrs Marie-Terezia Schauerhuber, with her 63-year-old husband, Ernst Schauerhuber, as its Chief Executive Officer.?
Opus 7 is demanding 11.2 million Euros as payment of the financing costs for the arrangement fees, management fees and commitment fees within 30 days of the loan’s approval.
The report by D&B, and cited by the New Statesman and made available to members of the Finance Committee of Parliament, categorically doubts the capacity of Opus 7 to raise any meaningful credit to undertake any business venture.
It reads, “The D&B maximum credit recommended for this business [Opus 7] is 100,000 CZK,” or $5,263.
Yet, this is the company that is to supply Ghana nearly $600 million worth of loans in two tranches.
D&B goes on to show that there is no record of Opus 7 ever contracting any loan agreements in the past and there is no record of its current net worth.
Opus 7, which employs not more than five people, is classified as a “below average” company and therefore very risky for the Ghana Government to enter into any credit agreement with.
“The company did not even fill in their last financial statements at Registration Court”, as it is required to do, according to the due diligence report.
Indeed, its bankers could not be located anywhere: “No bankers of the company revealed,” the due diligence report states.
LOAN AGREEMENT TERMS
The 442 million Euros loan agreement between the Government of Ghana and Opus 7, s.r.o. Satov, Hnanice, Czech Republic, is also to finance the purchase of 2 air ambulances, 50 medical mobile clinics and 10 educative mobile vans.
The Executive Director of the Danquah Institute, Asare Otchere-Darko, alias Gabby, has called for caution because both the ill-fated IFC and CNTCI loans received parliamentary approvals before the controversy surrounding them came to light, forcing the previous NPP government to abandon them in a very embarrassing manner.
DI has also argued that the $1.5 billion STX deal was “recklessly over-priced”, by some estimated $800 million.
This, DI argues, shows that even where a loan has been approved, the lenders may find it difficult to raise the money. It is interesting to note that two months after the President cut the sod for the construction of 30,000 housing units for the security forces, and 8 months after Parliament approved it, not even the land has been cleared for construction to begin by the Korean firm.
housing units for the security forces, and 8 months after Parliament approved it, not even the land has been cleared for construction to begin by the Korean firm.
According to the memorandum sent to Parliament by the then Health Minister, Dr Benjamin Kunbuor and Finance Minister, Dr kwabena Duffuor, "the supply of the ambulance vehicles, mobile clinics and educative vans will be made in 6 monthly installments, starting about 5 weeks after the submission of a sovereign guarantee... The air ambulances will be delivered within 8 months from the date of submission of a sovereign guarantee... The construction of the district hospitals will be done in two tranches."
However, the disbursement schedule itself puts the disbursement, of 75 million Euros, three months after the sovereign guarantee is submitted, with the last disbursement of the first tranche coming 32 months after the submission of sovereign guarantee.
According to the loan agreement before parliament, Tranche 1 will involve the construction of 8 of the hospitals. It "consists of a total amount not exceeding 255 million Euros. Of this total amount, 247,222,500 Euros is available for the total project costs and the remaining 7,777,500 Euros for the payment of the financing costs for the arrangement fees, management fees and commitment fees...
payment of the financing costs for the arrangement fees, management fees and commitment fees...
“Tranche 2 consists of a total loan amount not exceeding 112 million Euros for four district hopsitals. Of this total amount, 108,584,000 Euros is available for the total project costs and the remaining balance of 3,416,000 Euros for the payment of the financing costs..."
The disbursement of the second tranche for the four other district hospitals will also take 23 months.
The duration of the entire project is put at two years, but by this calculation it could take at least 3 years for the project to complete even if things go according to the programme.
There are three separate loans with Opus 7, with two being the 367 million Euros $487.4m) of two tranches for the construction of 12 district hospitals.
One is a supplier's credit agreement of 75 million Euros ($100m) for the supply 200 new ambulance vehicles, 50 unit mobile clinic vehicles, two used airlifted ambulances, training of personnel, 10 educative mobile van with video wall unit and "provision of required infrastructure needed [sic] for the delivery of the above services."
Particularly, Ghana Government, "the buyer will not pay any interest on the amount of the loan disbursed and outstanding over the period of the loan."
It is only on default of payment (late payment) that will attract a 2% interest on amounts due, calculated on compound interest.
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