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General News Wed, 14 Jul 2010

Parliament suspends debate on adoption of STX housing deal

Accra, July 14, GNA - Parliament on Wednesday failed to conclude the adoption of a Suppliers Credit Financing agreement between the government of Ghana and STX Engineering and Construction Ghana Limited, a Korean company, and thus suspended it till Thursday July 15, 2010.

The Minority argued that the off-taker document must be made available to all members to appreciate the contents before they could be ratified by Members of Parliament.

A report by the Finance Committee stated that over the next five years, 200,000 housing units would be built in all the ten regions in Ghana, 45 per cent of which the Government would become an off-taker to meet some of the accommodation needs of security services in the country.

The report stated that Home Finance Company would become an off-taker - a mortgage finance provider of the remaining 55 per cent.

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STX Company is to provide government with an amount of $1,525,443,468.00 for the construction of 30,000 Units of houses out of 90,000 units as duty post for security agencies representing 45 per cent as off-taker agreement between government and the STX Company.

The estimated cost of the overall project is 10 billion US dollars.

The terms and conditions of agreement include, total contract amount up to 1,525,443,468 US Dollars, grace period of five years, repayment period of 15 years (semi annual payments), maturity period 20 years, interest rate two per cent fixed annum, arrangement fee, 0.75 flat, management fee of 0.5 flat and grant element of 36.93 per cent.

Mr Cletus Avoka, Majority Leader, however said he was surprised at the stand of the Minority because there was a consensus among them about how the debate would be approached.

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He said government was very transparent with the deal and was not hiding anything.

Papa Owusu-Ankomah, Member for Sekondi, said he was disappointed about the comments of the Majority Leader and that if he continued that way he (Majority Leader) would retard the progress of the business of the house.

The Chairman of the Finance Committee, Mr James Klutse put the motion and was seconded by Mr David Tetteh Assumeng, Member for Shai Osudoku

The Committee's report noted that a letter from the Korean Ambassador to Ghana indicated that the Korean Government had identified Global Infra Fund as part of the sources from, which the Korean Government was supporting the STX group to provide the finance and was partnering STX Ghana for the project.

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The report also stated that the group's current financial standing was over 25 billion US Dollars turnover per annum and that it was eligible to obtain any credit facility without Korean Government's support in Korea and any part of the world.

It said "it is particularly so when the repayment is well guaranteed by the government of Ghana, which was pre-requisite for acquiring credit facility for project."

The amount and the sources of funding, however, generated a heated debate between both the Minority and the Majority.

Dr Anthony Osei Akoto, Member for Old Tafo, argued that it was not clear if STX was a finance company and therefore wondered how it was going to provide the amount.

He said though he is a member of the Committee, he had reference to any joint agreement and therefore moved that it should not be adopted.

Mr Alban Sumani Bagbin said the report before the house was a draft adding that all feasibility studies on the project had been carried out and now awaiting members' approval to start the project.

Mr Seth Terkpeh, Deputy Finance Minister, said the nature of business of STX included project finance and infrastructure and was therefore the lender in this deal.

Mr Joe Ghartey, Member for Esikadu/Ketan, drew the house's attention that certain portions of the draft were blank and that it had not been signed and therefore urged members not to adopt it.

Source: GNA