The Minister of Finance, Seth Terkper, has confirmed the New Patriotic Party’s (NPP) claims that government intends to offer gas from one of the country’s gas fields to China for a loan from China Development Bank (CNB) for a period of 19 years starting in 2018.
Mr. Terkper however downplayed the NPP’s suggestion that the deal has bleak implications for Ghana explaining that the gas being offered will be drawn from only one of Ghana’s three gas fields.
Speaking on the Citi Breakfast Show, he indicated that it was “gas going to the Atuabo plant only under the GNPC. That is the only one we are talking about.”
Mr. Terkper also explained that this agreement was in line with government’s self-financing loan strategy following the negotiations with the CNB by a task force mandated to discuss the utilization of the $500 million remaining $1.5 billion of the $3 billion deal.
“The premise for the CDB facility, which is in tune with our self-financing loan strategy is that proceeds from any commercial project must be used to pay for any loans that are used to finance the project,” he said
“The payment was to be from revenue flows from crude oil which is sold on the international market at bench mark prices but crude oil prices fell and that source of financing the loan became inadequate,” Mr. Terkper noted in unison with the NPP’s narration.
He also explained that the strategy of self-financing loans was to avoid putting any burden tax payers.
“So we had indicated that once the processes start, there could be other source of financing repayment for the facility. That is the discussion that we are holding now, to see how we can use the proceeds from lean gas and from other gas sources to finance any infrastructure that is built and not put the load for such infrastructure on the tax payer and increase public debt.”
Background to claims
Addressing a news conference on Wednesday, Policy Advisor to the NPP campaign, Boakye Agyarko revealed that President Mahama’s cabinet had recently given approval to a proposal to entice the China Development Bank to re-activate the remaining $2 billion of the $3 billion loan which the Chinese discontinued a disbursement of $1 billion.
In the original Master Facility Agreement, 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 the NPP. But the Chinese eventually considered this deal insufficient because of the slump in oil prices, refusing to release the remaining tranches.
Thus in a new offer to the CDB, 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.