Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Joint Committee on Finance and Works and Housing on the Grant and Loan Agreement between the Government of Ghana and FMO/ORET and Fortis Bank N. V. of The Netherlands for an amount of seventeen million, six hundred and nineteen thousand, two hundred and eighty-two euros (€17,619,282) for financing the proposed Kumasi (Barekese/ Owabi) Water Supply Rehabilitation and Expansion Project.
Mr. Speaker, in so doing, may I present to you the Report of your Committee. Mr. Speaker, I may read the Background and then the Conclusion.
The above loan agreement was laid in the House on Tuesday, 29th May 2007 and referred to the Joint Committee for Finance and Works and Housing for consideration and report in accordance with article 181 of the Constitution and the Standing Orders of the House.
[NII ADU MANTE] To consider the loan agreement, the Committee met with the Minister for Water Resources, Works and Housing, hon. Hackman Owusu-Agyemang, the Deputy Minister for Water Resources, Works and Housing, hon. Christopher Addae, the Deputy Minister for Finance and Economic Planning, Dr. A. Akoto Osei, Mr. Cobbie Kessie Jr., Managing Director for Ghana Water Company and officials from the two Ministries and reports as follows:
Kumasi, which is the capital of Ashanti Region and the second largest urban centre in Ghana, has a current population of approximately 8 million. The water system serves a population of about 1.1 million, living in over 30 towns and villages covering a large area. The water source of Kumasi is the Barekese Reservoir on River Offin, and the Owabi Reservoir on the Owabi River.
The revised Barekese/Owabi Water Supply Rehabilitation and Expansion Project is to be undertaken by Messrs Taylor Woodrow B.V. of Netherlands. The treatment and rehabilitation works at Barekese/Owabi water treatment plants is to be designed with incremental expansion to meet the demand for water for Kumasi and its environs up to the year 2030.
Members may recall that a similar facility amounting to €27 million was approved by the honourable House for the implementation of the above project. This facility was mainly to be used to undertake major civil, mechanical and electrical works. However, during detailed follow- up discussions with the Donor Agency and the contractor, it was noted that for the expected benefits of the project to be realized there was the need to undertake additional works. These additional works led to an increase in the scope of works resulting in a review of the project.
3.0 Scope of Works
The initial project scope covered major civil and mechanical works and this included the following:
Replacement of intake pumps
Additional raw water pipeline
Expansion of the aerator
Additional high lift pump
After the review, additional scope of works, supply and services among others were included and these are:
Rehabilitation of the Kumasi water network and laying of additional distribution lines
Provision of 23,000 domestic water meters
Leakage reduction programme
Provision and installation of 60 zonal meters
Provision of technical experts for a period of two years to provide training
A complete study of Kumasi's water resources to prepare a master plan for Kumasi's water needs over the next 20 years.
3.1 Financing Cost of the Project
The total cost of the project is estimated at €37,807,485.00. This will be financed by:
(i) Oret Grant - €19,807,485.00
(ii) Loan Amount -- €17,619,282.00
4.0 Terms and Conditions of the Loan
The terms and conditions of the loan are as follows:
Contract Cost -- EUR 37,426,767.00
ORET Grant -- €19,807,485.00
Loan Amount -- €17,619,282.00
Repayment Period -- 10 years
Grace Period -- 2.5 years
Interest Rate -- Euribor + 0.5%
Management Fees -- 0.5% (flat)
Commitment Fees -- 0.25% per annum
Grant Element -- 4.66%
Total Grant Element -- 55.2%
The Committee observed that the revised project would support the rehabilitation and expansion of the existing capacity, including the extension of transmission and distribution network, as well as construction of new water treatment plants at Barekese and Owabi, in order to improve water supply to Kumasi and surrounding communities.
The technical team informed the Committee that after the initial loan was approved, there were detailed follow-up discussions with the contractor and the donor agency. After these discussions, it was agreed that there was the need to include additional works to ensure that the project is not only completed but that water reaches the consumers.
The Committee was further informed that a master plan to meet the water demand for Kumasi and its environs up
to the year 2030 is being developed and there is the need to include this in the project design. Furthermore, as part of the requirements of the Environmental Protection Agency, there is the need to procure a sludge treatment plant to treat the sludge created by the treatment before it is released back into the watercourse.
The Minister informed the Committee that as a result of the revision of the project, this loan agreement replaces the earlier agreement approved by the House in December 2005. He explained that it was necessary to replace the earlier agreement so as to include the additional works in the project.
The Committee further observed that the project when completed would increase the level of service coverage and ensure a safe and constant supply of treated water which will improve the health and socio-economic condition and reduce the high level of non-revenue water.
The Committee noted that the project if implemented would --
improve access to potable water supply;
improve the level of service by increased service coverage in the metropolis and surrounding towns and villages, and reduction of the high level of non-revenue water;
improve the growth in productivity of the inhabitants leading to economic development and poverty reduction;
[NII ADU MANTE] boost business opportunities mainly tourism and oil processing industries, and
maximise the social and health benefits of clean, safe and reliable drinking water.
The technical team informed the Committee that the project is expected to be completed in 24 months.
The Minis t ry of F inance and Economic Planning has indicated that the terms of financing proposed by Messrs Taylor Woodrow for the project meets Government of Ghana's conditions for concessionary financing and The Netherlands Government also has confirmed its support to the project which is to be financed on concessionary terms by FMO/ORET of The Netherlands.
The Minister further informed the Committee that the ORET facility is due to expire on 31st May 2007 and this grant forms 50 per cent of the total cost of the project. Due to this, failure to approve the loan before the end of May means that Ghana would lose the ORET grant.
Having satisfied itself with the benefits to be derived from the project and the terms of the loan, the Committee respectfully recommends to the House to approve by Resolution the Loan Agreement between the Government of Ghana (GOG) and the FMO/ORET and Fortis Bank of The Netherlands for an amount of €17,619,282.00 for the Revised Barekese/ Owabi Water Supply Rehabili-tation and Expansion Project in accordance with article 181 of the Constitution and section 7 of the Loans Act, 1970, Act 335.
Respectfully submitted. Mr. Kwadwo Agyei-Addo (NPP -
Fanteakwa): Mr. Speaker, I beg to second