Business News of Wednesday, 5 September 2018
Source: www.ghanaweb.live
2018-09-05Bawumia takes business community through details of $2bn Sinohydro deal
play videoDr. Mahamudu Bawumia, Vice President
Business leaders at day two of this year's Ghana Economic Forum were treated to some details about the controversial $2 billion Sinohydro deal that the government claims will be used to mitigate the country's infrastructural deficit.
Vice President Bawumia addressing the gathering of business moguls of both public and private sectors disclosed that the deal with the Chinese is an
Read full articleinnovative and outside the box thinking that will not add any more debts to the country's debt profile but leverage Ghana's resource worth billions of dollars to provide essential needs of the people.
Dr Bawumia explained that the deal involving the Chinese firm requires them to spend half of the money, $1 billion in roads and bridges infrastructure across the country and the remaining on other projects like construction of schools, hospitals and other facilities the country require.
He added that the projects across the country will be at the prerogative of the government and Sinohydro's only commitment is to construct within three years the selected projects.
Failure to complete the agreed projects as scheduled will result in a no payment by government for the uncompleted projects.
Dr Bawumia also detailed that the Mining and processing of the bauxite will be done by a separate entity in partnership with government through the Integrated Bauxite and Aluminium Development Authority.
Sinohydro he mentioned to the gathering were only to deliver projects worth $2 billion and nothing else as the mining and refining will be done by government and a partner entity it is yet to select that has the requisite technical know-how and the capacity to engage in such business.
The government after processing the raw bauxite into refined products with a higher value will then use that to pay off the Chinese company for the work done.
“What this arrangement does basically, is to say that we agree with Sinohydro that they provide us our choice of infrastructure worth $2 billion. The Sinohydro Corporation which is going to provide the infrastructure is not the company that is going to mine the bauxite and they are not taking our raw bauxite. In other words, Sinohydro is not a mining company,” Vice President Bawumia noted.
He continued, “rather, government in our plans has set up a holding company backed by an Act of Parliament which is the Ghana Integrated Aluminium Development Corporation and that holding company will soon enter into a joint venture agreement with potential mining companies, aluminium refiners and off-takers to establish the bauxite mines and refinery".
“After mining and refining, Government of Ghana will then use her share of the refined bauxite to pay-off whatever cost of the infrastructure provided by the Sinohydro Corporation. This will only happen after a period of three years and on condition that Sinohydro has completed the infrastructure projects that the people of Ghana has asked them to do” he charged.
Vice President Bawumia stated “So Sinohydro will be providing the infrastructure, but Ghana will choose its own partner to set up the integrated aluminium development industry. The partners could come from America, Australia, Canada, China, wherever. Once we are confident of the capacity of the potential partners, we can enter into partnership with them.
He further allayed the fears of sceptics about the inability of government to pay back the loan indicating that Ghana has bauxite worth $50 billion in the raw state but has the potential to reach $400 billion after refining.
Minority's position
Minority has disputed government's position that the deal is not a loan insisting that the deal as per the current arrangements will add to the country's debt stock which currently stands at $120 billion, 69% of GDP.
"Let nobody attempt, through deception, to say that this is not a loan," Minority leader Haruna Iddrisu said during the Parliamentary approval of the Master Project Support Agreement (MPSA) covering the agreement.
The Minority following this, wrote to the IMF country director seeking clarification on the labelling of the deal.
The IMF Country Representative Natalia Koliadina in response to the request by the Minority noted, "given the complexity of the transaction, I am unable to answer your questions immediately."
