Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Finance Committee on the Loan Agreement between the Government of Ghana and Commerzbank AG, Belgium for an amount of Euro 14,417,425.00 (fourteen million, four hundred and seventeen thousand, four hundred and twenty-five euros) for the supply of the second batch of 75 VDL Jonckheere Buses, Spare Parts
and cost of Insurance Premium.
Mr. Speaker, may I now present the Report of the Committee. Mr. Speaker, in doing so, may I crave your indulgence to read the “Background, Project Financing and the Conclusion” thereof.
The Loan Agreement between the Government of Ghana and Commerzbank AG, Belgium was laid in the House on Friday, 9th March 2007 and referred to the Finance Committee for consideration and report in accordance with article 181 of the 1992 Constitution and the Standing Orders of the House.
To discuss this document, the Committee met with the two Deputy Ministers for Finance and Economic Planning, hon. Prof. G. Y. . Gyan-Baffour, hon. Dr. A. Akoto Osei, Deputy Minister for Transportation, hon. Magnus Opare- Asamoah and officials from the Ministries of Finance and Economic Planning and Road Transportation and reports as follows:
As part of the actualization of mass transportation in the country and to boost the operations of the Metro Mass Transit (MMT), the Government of Ghana had entered into a commercial agreement with the VDL Jonckheere Bus & Coach N.V. of Belgium for the supply of 150 commuter Buses and spare parts to the Metro Mass Transit Limited (MMT) with an export subsidy from the Belgium Government.
This Agreement was laid in the House on 31st October 2006 and approved by this honourable House.
Due to the requirements of the Belgium Government and its yearly budgetary constraints with regard to the granting of export subsidies, the financing of the one
hundred and fifty (150) buses had to be spread over two fiscal years, that is 2006 and 2007.
On 31st October 2006, a loan agreement amounting to €14,417,425.00 from Commerzbank AG, Brussels Branch, Belgium plus a credit insurance premium for the importation of the first 75 buses was also approved by the House to augment the fleet of buses of the MMT.
The second batch of 75 buses and spare parts is to be financed with an export Credit arrangement from Commerzbank AG, Brussels Branch, Belgium with an interest subsidy from the Belgium Government for the sum of €14,417,425.00 which is before this august House.
3.0 Project Financing
The first batch of the seventy-five (75) buses plus the credit insurance premium was financed through a soft Loan Agreement for the sum of €14,417,425.00 which was ratified by the House in November 2006.
The second batch of the seventy-five (75) buses and spare parts would be financed with a soft loan under Export Credit arrangement from Commerzbank AG, Brussels Branch, Belgium with an interest subsidy from the Belgium Government. 4.0 Terms and Conditions
The terms and conditions of the loan are as follows:
(i) Amount -- Euro 14,417,425.00 Export Credit
from Commerzbank AG, Brussels Branch, Belgium representing 100 per cent of the cost of 75 buses and spare parts (being €12,725,000.00 p l u s credit insurance premium of €1,692,- 425.00) from the office national Du Ducroire.
(ii) Interest Rate -- 0 per cent (zero per cent) per annum. (Article
(iii) Repayment Period -- 15 years by 30 semi-annual instalment (Article 7).
(iv) Moratorium Period -- 10 months after effective date of the Contract.
(v) Grant Element -- 44.08 per cent. 5.0 Observations
The Committee observed that these buses will help transport workers to their various offices early thereby reducing lateness at work and thereby increasing productivity. It
will also help in the transportation of the public there by further improving public transportation system in the urban centres.
The Committee further observed that the operations of the metro buses are gradually boosting public confidence in public transport.
It is anticipated that this will reduce the number of vehicles plying roads, reduce traffic jams, thereby improving the overall traffic situation in the cities.
The Committee noted that the additional buses would be effectively deployed to augment the current fleet of the Metro Mass Transit in order to enhance the operations of the Company in the country.
The technical team explained to the Committee that the Government of Ghana has entered into a Commercial Contract with the Belgium Government for the supply of (150) Jonckheere buses. Due to the requirements of the Belgium Government and its yearly budgetary constraints with regard to the granting of export subsidies, the financing of the 150 buses will be spread over two fiscal years (2006 and 2007).
The Committee observed that the first 75 buses will be delivered during the fourth quarter of 2007 and the first quarter of 2008 and the second batch would be delivered in the second and third quarters of 2008.
The Committee was informed that all taxes, levies, fees and similar costs arising at present or future outside the Kingdom of Belgium in connection with this Loan Agreement shall be borne by the Borrower.
The Committee noted that the loan facility has a grant element of 44.08 per cent and therefore is concessionary.
Considering the concessionality of the facility and the anticipated gains to be derived from the Metro Mass Transportation as a result of the supply of the buses, the Committee respectfully invites the House to approve by resolution the supply of the second batch of 75 VDL Jonckheere buses and spare parts, and cost of insurance premium amounting to fourteen million, four hundred and seventeen thousand, four hundred and twenty-five Euro (€14,417,425.00) under Belgium Govern-ment concessionary financing for the Metro Mass Transit Limited (MMT) in accordance with article 181 of the Constitution and section 7 of the Loans Act, 1970 (Act 335).
Deputy Minister for Finance and Economic Planning (Prof. G. Y. Gyan- Baffour): Mr. Speaker, I beg to second the motion.