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US$2bn Ghana-China bauxite deal under criticism

Image result for atiwa forest bauxite

Adnan Adams Mohammed
The approved Master Project Support Agreement facility by Parliament in July 2018 for the construction of priority projects in Ghana by Chinese firm, SynoHydro Corporation which is to leverage Ghana’s bauxite reserve at Atewa forest for amount of US$2 billion from China has come under strong criticism by some stakeholders and the minority in Parliament.
The minority in parliament have already petitioned the International Monetary Fund and the World Bank to stop the government of Ghana from advancing the agreement which it has described as a disguised loan facility.
A former Chief Executive Officer of the State Enterprises Commission, Dr. Camynta Baezie, wants government to review the US$2 billion bauxite agreement it had with China.

Finance Minister, Ken Ofori-Atta, while presenting the mid-year budget review in Parliament, said Sinohydro Group Limited, is expected to “provide US$2 billion of infrastructure including roads, bridges, interchanges, hospitals, housing, rural electrification, in exchange for Ghana’s refined bauxite.”

But Dr. Camynta Baezie believes the deal will not benefit the citizenry because it was poorly negotiated.

In an open letter to President Akuffo Addo on the matter, Dr. Baezie said the current bauxite deal is not in the interest of Ghana.
“The way the Chinese structure their things, it is always in their own interest and they never look at the interest of the other country. It’s the duty of government [of Ghana] to use all its expertise to try to get the best deal for Ghana. And I’m sure if a good negotiation is done, the Chinese are not unreasonable, they will agree to it. But what we have agreed to now is not in the best interest of the country,” he added. 
He said in 2010 the Energy Ministry came up with a comprehensive document on how to make monetary gains from the bauxite reserves.

To him, that document was better thought through than the recent $2 billion deal. 

Image result for atiwa forest bauxite

“…fortunately for us, in 2010, the Ministry of Energy came up with a comprehensive document of how to combine the integrated aluminum industry with other related industries in this country to create over 2.8 million jobs. To me that would have been a better deal to ensure that we create jobs out of this deal and within the four years, the tax revenue alone from the employees would have generated about 1.8 million dollars for the country,” he added.

Meanwhile, on the matter of description of the facility, of US$2bn worth of infrastructure from China in exchange for access to US$2bn worth of bauxite deposits, has been the crux of a fresh debate between the government and the opposition.

The Minority in Parliament is convinced this is a loan. The government has called it a barter arrangement. And the trade deal has seen the two factions trading words and calling each other names.

It all began in June 2017 when Ghana like her African brothers buoyed by China’s enticing offers, sent Vice-President Dr. Mahamudu Bawumia to the Sino Power corporation.
He dangled “less than 5%” of Ghana’s $460 billion bauxite deposits” before Chinese eyes in exchange for US$15bn.

The Vice-President returned to call it ‘creative’ genius in economic problem-solving and ‘leveraging what you have to get what you don’t have’ and in his praised ability at simplification, called it ‘government bringing land, so China will bring a tractor’.

The Minority would have none of this and has said the government is afraid to use a simple word borrowing – a politically-charged term in Ghana’s politics. Perhaps the height of which was after Dr. Bawumia called the NDC smart drunkards after then President Mahama said his government were smart borrowers.

A year later government brought to Parliament, the first fruits of Bawumia’s visit to China – a Master Project Support Agreement (MPSA) in which Sinohydro Corporation Limited would pre-finance the construction of roads, hospitals, interchanges, the works – all at the cost of $2bn.

Government has a repayment period of 12 years, with three years grace period.

Only the payment is in raw, core bauxite ore at an interest rate of between 2.8 per cent and less than 3.3 per cent per annum on the London Interbank Offered Rate (LIBOR).

Minority leader Haruna Iddrisu launched his attack on the deal: “Let nobody attempt, through deception, to say that this is not a loan. We need to be sober. If the government wants to borrow for infrastructure, say ‘we are borrowing’; we (the Minority members) will support you.”

Parliamentary approval has not stopped the Minority from petitioning the International Monetary Fund (IMF) and the World Bank in a letter dated August 10, 2018.

The petition wants “clarification” on “some legal and technical issues” in a “supposed barter transaction”.

Haruna Iddrisu has justified the letter, saying the Minority petitioned an “independent arbiter” to declare whether the agreement is a barter or a loan.

He said it is “practically impossible” for government to maintain this deal will not add to Ghana’s debt stock. That debt stood at about GHC120 billion as of last year.

The Minority leader questioned, the need for an “arrangement fee” in the deal if it is not a loan and observed government while bringing the agreement for parliamentary approval invoked Article 181 which deals with loan agreements.

A pro-government newspaper has called the Minority saboteurs, a tag Haruna Iddrisu dismissed. But government has also tagged the involvement of the IMF by the Minority as unpatriotic.

Information minister-designate Kojo Oppong Nkrumah has said, the IMF petition smacks of bad faith because the issues they raised are not new.

He said the concerns and questions by the Minority during the debate over the approval were all explained by government. The Minority has rehashed the issues because President Akufo-Addo will soon be heading to China to finalise the agreement, the minister said.

It is true they used Article 181 while seeking approval but the specific part of the law relied on does not apply to loans. It applies to international business transactions.

“The Minority want to insist the deal falls under Clause 1 and 2 of the Article but government used clause 5,” the minister insisted.

Article 181 clause 1 which the Minority is using, says government needs a majority if it wants to “enter into an agreement for the granting of a loan out of any public fund or public account”.

Clause 5 which the government wants says parliamentary approval is needed for any “international business or economic transaction to which the Government is a party as it applies to a loan”.

Kojo Oppong Nkrumah said bringing a business agreement to parliament does not make it a loan. He said judgment debt, for example, does not imply government has gone for a loan when it is only monies that a court of law has ordered a company or person to pay.

He stressed China is not bringing
money. It is coming with projects to solve Ghana’s need for US$2bn annually to bridge the infrastructure gap.

Sinohydro Corporation builds bridges, hospitals and roads, government hopes to make inroads into NDC-held political territory such as the Northern region which has been promised its first interchange.

The Minority has felt the NPP while in opposition demonised the word ‘loan’ and ‘borrowing’ of the Mahama administration.

They are intent on resisting any attempt by the government to use the word ‘barter’ and pass on to look like angels before the eyes of a public that is becoming politically unforgiving in recent times.

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