CDB task force to spend $6 million in pursuing $1.5 billion gas loan

A Presidential Special Task Force leading negotiations for the procurement of a $1.5 billion from the China Development Bank is set to expend a total of $6 million dollars while shuttling between Ghana and China.

The task force according to a document sighted by citifmonline.com is made up of five members.

The document titled ‘Decisions Memorandum on the Work of the Presidential Special Task Force on utilizing the US$3 billion CDB Facility’ stated that the amount would be spent on the team’s “negotiation support costs including hosting in Accra and travel to Beijing; technical advisor’s fees and contingencies.”

“The preliminary analysis of the three costs…above are budgeted at an amount of US$ 6.00 million (i.e. CDB Task Force Support Costs; Technical Fees; and contingencies). And it is estimated that the CDB Team and Advisors may well make up to a minimum of 6 to 8 separate negotiation visits to Beijing over 12 to 10 months on the assignment,” the document added.

The Decisions Memorandum however explained the Task Force’s lack of offices or attachment to any Ministry Department and Agency (MDA) “poses peculiar challenges.”

“…The more substantive needs of hosting several days of engagement with a visiting CDB negotiation team of usually 20 people more or less at a time requires more substantial logistical backup,” the document stated.

 Background of CBD loan

The governing National Democratic Congress about five years ago started chasing for $3 billion loan facility from the China Development Bank to finance some government projects.

Though government finally secured the loan, the amount was slashed by half.

Renegotiation of deal

Meanwhile the newly constituted Task Force is expected to ensure that the rest of the $3 billion is released to Ghana.

NPP accuses NDC government of luring Chinese with gas

The New Patriotic Party (NPP) at a press conference on Wednesday accused the Mahama-led cabinet of approving a proposed agreement which could see Ghana offering its gas to China in a bid to lure the China Development Bank to reactivate the reaming $1.5 billion of the $3 billion to the Ghanaian government.

The opposition party claimed that the agreement has bleak implications on the future of Ghana.

The agreement if successful could see Ghana offer one of the country’s gas fields to China for a period of 19 years starting in 2018.

We’ll mortgage Ghana’s gas to China but

Though the Minister of Finance, Seth Terkper, confirmed the deal with China on the Citi Breakfast Show, he downplayed assertions that it has bleak implications for the country.

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… 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,” Mr. Terkper noted.

Target for the Presidential Task Force as captured in the Decisions Memorandum:

The work of the CTF and TA will initially focus on bedding down the three RSAs for the project that were agreed upon to close the US$ 1.5 billion, and to assist the Ministry of Finance to document and negotiate the early disbursements that will free those subsidiary to implement the three projects.

The next focus of attention is the application of the remaining US$ 1.5 billion, as directed by H.E. the President.

A key consideration in the analysis for the foregoing work is whether or not the new structure of the project for which the remaining US$ 1.5 billion will be applied will fall within the parliamentary approval of 2012 or a new approval may be needed. This strategic and process analysis to be done by the NSA.

Navigating through the “establishment” (GoG Executive Machinery, Legislature, MDAs, MMDAs, Legal system, approval and authorizing agencies, etc.) can be a daunting task. Indeed, this can constitute a key impediment to rapid negotiation decision-making. The technical advisor will facilitate the CTF’s interface with the establishment to achieve speedy and timely closure to specific issues that may require their involvement in the course of the negotiations.

While the above provides a guide to the nature of the outcomes that may be bench marked for the work of the CBD Task Force, the broad targets can be narrowed down to specific negotiation issues, or be expanded to include others. A key principle underlying the approach to the work by the CTF and also covering the TA’s advisory inputs is the avoidance of the undertaking tasks or activities like feasibility studies that are best left to project contractors to conduct to show evidence of their capability reports citifmonline.com.