Vice President, Dr. Mahamadu Bawumia, has revealed that the Chinese government will release the remainder of the $3 billion China Development Bank (CDB) loan it withheld.
Dr. Bawumia addressed the press after arriving from a four-day official visit to China, where he disclosed that he “met with the Vice President of the China Development Bank and we were able to successfully negotiate the reactivation of the remainder of the entire loan that was given to Ghana.” “There was a $3 billion master facility, under the previous government, that was given to government. $1 billion or so was disbursed for the Atuabo Gas Plant but the remaining $2 billion or so was frozen for certain reasons.”
“We were able to successfully discuss and address some of the concerns and they have agreed to discuss and address some of the concerns and they have agreed to technically unfreeze that amount,” Dr. Bawumia disclosed. The Master Facility Agreement (MFA) on the loan was signed on December 16, 2011, following the International Monetary Fund Board’s approval on December 14, 2011, for increasing Ghana’s commercial borrowing ceiling for 2011 from $800 million to $3.4 Billion.
Parliament approved on the loan agreement in August 2011 amid concerns over the terms and conditions of the agreement, particularly, the collateralization of oil against the loan.
Mortgaging Ghana’s gas
Before the change in power, in 2016, Boakye Agyarko, the current Energy Minister, alleged that the Mahama administration had given approval to a proposal to entice the CDB to re-activate the remaining $2 billion of the $3 billion loan.
In the original Master Facility Agreement, the government committed to supplying, as collateral security, 13,000 barrels per day of crude oil up to 2027 to service the CDB facility, according to him.
But the Chinese considered this deal insufficient because of the slump in oil prices, and refused to release the remaining tranches. Thus in a new offer to the CDB, the government proposed the export of all the Natural Gas Liquids to be processed by the Ghana Gas processing plant at Atuabo from 2018, estimated at the value of $1.5 billion.
Seth Terkper, the Minister of Finance at the time, confirmed Mr. Agyarko’s claims, noting that the offer was to involve gas, for a period of 19 years, starting in 2018. Mr. Terkper, however, downplayed suggestions that the deal had bleak implications for Ghana, explaining that the gas being offered would be drawn from only one of Ghana’s three gas fields.
He also explained that, this agreement was in line with government’s self-financing loan strategy following the negotiations with the CDB by a task-force mandated to discuss the utilization of the $500 million remaining $1.5 billion of the $3 billion deal.