Parliament has approved a €74.1 million buyer's credit facility agreement for the Tarkwa Water Supply Project.
The amount is made up of €65 million for a commercial contract and the associated Credendo premium of €9.1 million for the Export Credit Guarantee from Belgium.
It involves KBC Bank NV and Commerzbank AG (as arrangers and original lenders) and KBC Bank NV (as agent.
The project aims to expand access to potable water supply for the inhabitants of Tarkwa and its adjoining communities by expanding the capacity of its existing Bonsa Water Supply System and extending access to adjoining communities such as Bonsa/Bonsaso, Bankyem, Charliekrom, Efuanta, Kwabedu, Mantrem, Agona Wassaw and Nsuta.
The rest are Tamso, Fanti Mines, Senyaekurase, Akyempem, Simpa, Dompin-Papase, Brofroyedu, Atoabo, Aboso, University of Mines and Technology and other settlements.
The Project will expand the capacity of the existing water supply system from 2.8m3/day (0.6MGD) to 27,000m3/day (6MGD) to meet the present demand of 15,000m3/day (3.3MGD) and also to meet the projected water demand for the Municipality for 2040.
The project is expected to be completed in 36 months with a defect liability period of 12 months from handing over each complete element to the client.
Mr Kwaku Agyeman Kwarteng, the Chairman of the Finance Committee of Parliament, who moved the motion for the approval of the loan, said the Committee after a careful examination of the Agreement was convinced that the Facility when approved would help expand access to water in Tarkwa and its surrounding areas, and therefore recommended to the House for its approval.
Dr Cassiel Ato Baah Forson, the Ranking Member for the Finance Committee, who seconded the motion, said the terms of conditions of the loan facility were 1.1 per cent plus six months libor, and that they were informed that the Government of Ghana would be paying a commitment fee of 0.4 per cent and an upfront fee of one per cent to support the Tarkwa Water Supply Project.
"Mr Speaker, my concern relates to the fact that Government of Ghana is taking a loan of €65 million but we are paying an insurance premium of €9.1 million,” he said.
“Mr Speaker, this means that the insurance for the facility alone is 14 per cent of the loan amount, I recognise that this is high but I will only urge the Ministry of Finance going forward to start working on our insurance premium.
“Mr Speaker, it looks as if Ghana is paying so much insurance on some of these export credit agency loans.”
He said the loan itself was quite cheap but the associated insurance was something that Ghanaians should be worried about.
He also raised concern that the value for money audit was not done by the Finance Ministry before the loan became effective.
Mr Osei Kyei-Mensah-Bonsu, the Majority Leader of Parliament, who agreed with the Ranking Member on the value for money audit, noted that going forward, it was high time Parliament begins to engage the services of experts to do value for money audits before loans were approved by the House.