Parliament Approves First Tranche of Sinohydro Deal

By Eva Frempon-Ntiamoah

Parliament has approved by resolution the deferred payment agreements between the Government of Ghana and Sinohydro Corporation Limited for an amount of US$ 646,637,879.74 million.

This amount is the first tranche of a total amount of $2 billion to support the construction of Priority Infrastructure Projects in Ghana.

The agreement sets the terms and conditions of the referral of payments under the Engineering, Procurement and Construction (EPC) contract agreement to finance the construction/rehabilitation of selected roads and interchanges in Ghana.

The loan has a 15 years tenure, with grace and repayment periods of three and 12 years respectively. It has interest rate of six months US Libor + 2.80% per annum; 0.70% flat management fee and 0.50 % per annum commitment fee. It also includes a Sinosure premium of 7% flat.

Presenting a report to plenary, Chairman of the Finance Committee, Dr Mark Assibey Yeboah, said in ensuring the operational efficiency of road transport in moving persons, goods and services within the country and with neighbouring countries, the government has implemented some major road infrastructure projects and continues to source funding to implement additional critical infrastructure such as hospitals, bridges, interchanges, roads, affordable housing and fishing landing sites in line with its infrastructure development agenda.

The Projects to be undertaken under the Phase 1 of the Master Project Support Agreement, will cover the following road infrastructure: Accra Inner City Roads, Kumasi Inner City Roads, Tamale Interchange Project, PTC Roundabout Interchange Project, Takoradi, Adenta-Dodowa Dual Carriageway, Sunyani Inner City Roads, Western Region and Cape Coast Inner City Roads, Upgrading of selected Feeder Roads in Ashanti and Western Region, Rehabilitation of Oda Ofoase -Abirem Road and Hohoe-Jasikan-Dodi Pepesu Road.

As to what preparations the government was making towards the extraction of the bauxite resources to ensure repayment of the facility, the report stated that Lot 8 of Phase 1 is dedicated to the rehabilitation of 68kms of feeder roads in Ashanti and Western regions.

"These roads lead to areas where bauxite is located and hence their rehabilitation would facilitate and prepare the grounds for the extraction of the resource."

The report, however, noted that the Ministry of Finance is required to ensure that the proceeds generated by the Government of Ghana from selling refined bauxite would be deposited into an Escrow Account which shall be opened and maintained in a reputable offshore Bank acceptable to Sinohydro and the financiers.

Any applied amount up to the total balance in the Escrow Account shall be remitted to Sinohydro to service the facility upon the presentation of Interim Payment Certificates (IPC) signed by the Ministry at Roads and Highways (MORH).

The Ranking Member on the Finance Committee, Cassiel Ato Forson, lamented that the original EPC contract price is US$497, 200, 051.27 and Government will be paying a whopping US$150m, which is 35% of the total amount, as interest.

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