Parliament approves $162m China loan agreement for electricity supply equipment

Parliament has approved a suppliers credit agreement between the government of Ghana and the China International Water and Electricity Corporation for an amount of $162 million.

The amount is for the supply and installation of materials and equipment under the national electrification scheme for the Volta and other regions as an extension of the Upper West Electrification project.

The adoption of the resolution was met with disagreement from the Minority, who cited that there was discrepancy with the title, which read: “For the supply and installation of materials and equipment under the National Electrification Scheme (Upper West Electrification Project)”. They said no community in the Upper West has been named to benefit from it.

Dr Anthony Osei Akoto, Member for Old Tafo, raised the issue that was supported by Mr Mathew Prempeh, Member for Manhyia, Mr Ambrose Dery, Member for Lawra Nandom, Mr Osei Kyei Mensah Bonsu, Minority Leader and the Speaker, Mrs Adeline Bamford Addo that the loan was meant for Volta Region and other regions and not for Upper West Region so the title must be changed.

Mr Seth Tekpeh, Deputy Minister for Finance and Economic Planning accepted to make the necessary amendment as he explained that the loan was sourced from the same place as was in the case of the Upper West Electrification project so the committee deemed it fit to leave the title as such.

Mr Tekpeh was asked by the Speaker to move the motion as amended and it was seconded by Mr James Klutse, Chairman of the Finance Committee.

Mr Klutse, who read the committee’s report, said the credit was to finance the supply and installation of electrical materials and equipment under the National Electricification Scheme to extend the scope of works of the Upper West Electrification project to cover projects in the Volta and six other regions.

The project covers a total of 600 communities in seven regions with 58 communities in Ashanti, 22 in central, 27 in Greater Accra, 376 in Volta, 24 in Western, 66 in Brong Ahafo and 27 in Northern regions.

The loan has a four-year grace period, 11 years repayment period, maturity period of 15 years, interest rate covers US 6 Month Libor+0.8 percent per annum and a grant element of 35.90 percent.

The report also noted that government of Ghana counterpart funding of $18million would be spread over the project execution period of the three years and that the first tranche had been included in the 2011 budget.

The report again stated that under the SHEP 4 Phase I project, costing $90 million and executed by CWE, 420 communities were connected to the national electricity grid and additionally, 531 communities were connected under SHEP 4 Phase 2 at the cost of $170 million.

The report explained that the additional credit of $162 million had become necessary because the contractor did not adhere to proper project management procedures and therefore started installation works in several communities which had not been earmarked under the $170 million project package.

The scope of the project involves design, manufacture, delivery, installation, completion and commercialization of the electrification project. It would be disbursed in two tranches of $81 million each with the first in 2011 financial year and the other tranche in the 2012 financial year.

Source: GNA

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