Government grabs $4bn fresh Chinese deal

The Chinese government has struck another $4 billion deal with the Government of Ghana (GoG).

Under the current agreement, the Chinese state-owned Sinohydro Corporation Limited will undertake a Multipurpose Hydro Project at Pwalugu, a Volta Lake Transportation Project, an Accra Flood Prevention Project, as well as other priority infrastructure projects, including garbage treatment and solar power plants, as well as rail project, at an estimated cost of $4 billion.

A Memorandum of Understanding (MoU) was signed in Accra on Wednesday to that effect.

This brings to $19 billion, the commitments made by the Chinese government and its agencies following the acceptance of the financing model proposed by Vice President Dr Mahamudu Bawumia during his recent state visit to the People’s Republic of China which involves leveraging a fraction of Ghana’s bauxite deposits.

Senior Minister Yaw Osafo-Maafo signed the MoU on behalf of the Government of Ghana while Chen Zhenrong, a representative of Sinohydro in Ghana, initialled on behalf of the company and the government and people of China.

“Sinohydro has made representations to Ghana that the financing model proposed by Ghana is acceptable to her and that it has the technical capability, the competencies, the experience, the financial capacity and other resources to finance and execute the projects proposed in this MoU and to be determined, totalling up to $4 billion,” part of the MoU reads.

Projects proposed under this new deal are expected to be executed in accordance with specifications and standards approved by the Government of Ghana, while Sinohydro would act as the principal project development partner and work through local companies with significant Ghanaian participation.

It would be recalled that Vice President Dr Mahamudu Bawumia, after a four-day official visit to the People’s Republic of China, announced the signing of a number of MoUs with Chinese state actors to provide financing for a number of infrastructural projects in Ghana to be financed through the exploitation of some of Ghana’s minerals, particularly bauxite.

Briefing the media after the four-day state visit, Dr Bawumia indicated, “Our trip was purposeful. We came back with some leading Chinese companies and agencies of the Chinese government signalling their interest in our agenda and with agreements totalling $15 billion, with the possibility of a further $4 billion in the near future.”

Giving a breakdown of the agreements, Dr Bawumia stated, “The China National Building Materials and Equipment Import and Export Corporation (CNBM) signed a $2 billion facility with the private sector – led by the Association of Ghana Industries (AGI) – to provide funding for the ‘one district, one factory’ programme.

“China Development Bank (CDB) agreed to unfreeze $2 billion loan and signalled their willingness to re-negotiate it into a concessionary facility with a grant element, an extended maturity and at a much lower interest rate.

“The China EXIM Bank is committed to providing about $1 billion to EXIM Bank Ghana to support infrastructure and business development.

“China Railway International Group Limited signed a Memorandum of Understanding to provide $10 billion to support the components of a massive infrastructure development programme spanning the mining, industrial and railway fields.

“We are undertaking all of these projects, not by borrowing but with less than 5% of our refined bauxite reserves.”