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Ghana defends STX housing deal, insisting it comes with financing

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The government of Ghana has defended the STX housing deal saying it did no wrong in awarding the contract to Korean company STX Engineering, which is not known to build houses, adding that the deal comes with financing and attractive terms.

Meanwhile, the signing of the deal which was scheduled for Monday September 20, 2010 at the Castle, Osu was called off following what the government simply described as “Legal issues that could not be resolved immediately at the last meeting before the ceremony.” But as it turned out, these “legal issues” is a clause in the final agreement which says Ghana’s oil will be used as collateral for the repayment of the loans for the construction of the houses.

The clause was not in the draft agreement that was put before parliament before it was approved.

The deal has faced stiff opposition from some civil society organizations and opposition parties, who have all called for it to be scrapped.

Deputy Minister of Finance, Seth Terkpe said on a BBC Network Africa programme this week monitored by ghanabusinessnews.com, that giving the deal to STX means that the government of Ghana would not have to finance the project from its budget.

He said this in response to a question by the BBC Accra Correspondent, David Amanor as to why the contract was not given to the country’s contractors group, the Ghana Real Estate Developers Association (GREDA). The group had put up a protest to Parliament and a proposal arguing it could build the 200,000 unit houses required under the deal at half the price being offered by STX Engineering of Korea which is worth $10 billion.

In a press statement, GREDA, while commending the government for its good intentions and commitment to significantly tackle the country’s huge housing deficit, it said the STX deal does “not at all represent value-for money.”

The estate developers said they are able to construct any type of building required in Ghana, pointing out that “Ghanaians built Dansoman, Sakumono and other estates, and all the barracks we have today, Ghanaians built the city of Tema, State House (Job 600), and Cedi House, local private estate developers have built world Class residential properties.”

But a few days after petitioning Parliament over the matter, GREDA withdrew its concerns saying its “initial fears had been allayed.”

Mr. Terkpe said there is a difference between the two offers. “The difference is that one contract comes with financing and other attractive benefits, but the other one does not.”

He also defended the $50,000 cost per unit for the houses saying it is “average cost”. He said there are other infrastructures like schools, shopping or market facilities and hospitals, therefore, “it is erroneous to say government is paying $50,000 per unit of housing.”

He also argued that government has negotiated a good deal, adding that “but your ability to negotiate is limited.” According to Mr.Terkpe, Ghana is paying political risk insurance, arguing that it is as a result of a perception about Africa. “African countries pay political risk insurance, we can only negotiate the terms down, we can’t do anything about this.”

The government of Ghana, the South Korean government and STX Group of South Korea signed the deal Tuesday December 8, 2009 for a $10 billion housing deal according to information emailed to ghanabusinessnews.com from South Korea. A former Minister of Works and Housing, Albert Abongo signed on behalf of Ghana.

By Emmanuel K. Dogbevi

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