Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Joint Committee on Finance and Mines and Energy on the Credit Agreement between the Government of Ghana and Fortis Bank of The Nether-lands for an amount of nine million, eight hundred and ninety-nine thousand, five hundred and eighty-three euros (€9,899,583) for the Self-Help Electrification Project (SHEP-4).
Mr. Speaker, in doing so I crave your
indulgence to present the Report of your Committee.
1.0 Introduction
The Credit Agreement was laid in the House on Tuesday, 12th June 2007 and referred to the Joint Committee on Finance and Mines and Energy for consideration and report in accordance with article 181 of the Constitution and the Standing Orders of the House.
To consider the document the Committee met with the Deputy Minister for Finance and Economic Planning, hon. Dr. A. Akoto Osei, Deputy Minister for Energy, hon. K.T. Hammond and officials from both Ministries and reports as follows:
2.0 Background
One of the methods for poverty reduction and growth agenda Ghana is undertaking is the extension of electricity infrastructure to support social infras- tructure, especially in the rural areas and operations of the production sector.
The National Electrification Scheme (NES) was set up to help realize this objective.
The National Electrification Scheme (NES) commenced in 1990 and is aimed at providing electricity to all communities
in the country over a 30-year period. Complementary to the NES is the Self- Help Electrification Programme (SHEP). Under the SHEP policy, communities within 20 km radious of an existing 11/33 kV network and which have provided the requisite Low Voltage (LV) electric poles and have further wired at least one-third (1/3) of the houses are qualified to be connected to the national grid.
So far about 4,000 communities in Ghana have been connected under the NES. Consequently, access to electricity in Ghana has grown from about 15 per cent of the population at the inception of the NES to the current level of over 50 per cent.
3.0 Project Financing
The total cost of the project is estimated at Sixteen million, two hundred and sixty-seven thousand, two hundred and twelve euros (€16,267,212.00). The financing package under the ORET Scheme comprises a loan in the sum of nine million, eight hundred and ninety- nine thousand, five hundred and eighty- three euros (€9,899,583.00) from the Fortis Bank of The Netherlands and a grant component of six million, three hundred
and sixty-seven thousand, six hundred and twenty-nine euros (€6,367,629.00).
4.0 Terms and Conditions of the Credit
The terms and conditions of the credit are as follows:
Contract Amount - - Euro16,267,212.00 (including financing cost of Euro1,685,262.00)
A. Grant Component - - Euro 6,367,629.00 (including 75 per cent of the financing cost)
B. Loan Amount (Facility) - - Euro 9,899,583.00 (including 25 per cent of the financing cost)
Interest Rate - - Euribor+0.5% = (3.76+0.5%=4.26%)
Grace Period -- 2.0 years
Repayment Period -- 10 years
Maturity -- 12 years
Grant Element -- 40.15 per cent.
5.0 Observations
The Committee noted that the facility has a grant element of 40.15 per cent which meets the Government's minimum concessionality requirement of 35 per cent.
The Committee observed that the cost of the project is US$16,267,212 and it includes a financing cost of €1,685,262. Under the financing terms, 62 per cent of the amount would be financed through the supplier's credit agreement amounting to €9,899,583. The grant component would be used to finance the balance which amounts to €6,367,629.
The Committee noted that the implementation of the project would enhance wealth creation by helping to establish cottage industries among others and the creation of employment and support for social services, which includes schools, health posts and so on.
The Committee observed that Phase 4 is expected to cost a total amount of US$350 million and a total of about 2,500 communities are expected to be connected to the national grid.
The Deputy Minister for Finance and Economic Planning informed the Committee that however, funding for the project is inadequate and therefore Government is looking for other alternatives to secure funding for the successful implementation of the project.
[NII ADU MANTE] [NII ADU MANTE]
Certainly, any facility that seeks to send electricity to our communities is a welcome one and deserves to be supported. But in doing so I have a small problem that has to be addressed by the Ministry of Energy.
Mr. Speaker, in our constituencies when electricity is being extended from one community to the other, sometimes some damage is incurred by farmers and property owners. At the last committee meeting, I raised this issue for the hon. Minister to respond. His response was that there was no policy position on compensation for those who may incur damages as a result of extension of power from one community to the other.
But I just want to take the opportunity to draw the hon. Minister's attention to the provisions of Lands (Statutory Wayleaves) Act, 1963, Act 186 and specifically, section 6 of it which, with your permission, I would want to read for his attention. It reads as follows:
6. Compensation
(1) Where any person suffers a loss or damages as a result of carrying out of a survey under this Act or as a result of installation, construction, inspect ion, maintenance, replacement or removal of a specified work that person is entitled, except where the loss or damage resulted from or arose out of the acts of that person, the servants or the agents, of that person and subject to this section, to compensation of an amount assessed by the Minister in respect of the loss or damage.”
Mr. Speaker, this is a very clear, unambiguous provision that has to be adhered to by the hon. Minister for Energy. I have had complaints upon complaints from our constituents whose farm crops have been destroyed as a result of extending power from one community
to the other, and they have not been paid compensation. It is in this regard that I want to draw attention to this particular provision so that the Ministry would factor in payment of compensation in their programme for the SHEP project.
Question proposed. Deputy Minister for Energy (Mr.
K.T. Hammond): Mr. Speaker, I also rise to contribute to, and to support the motion. Mr. Speaker, it is true that I had this discussion during the course of debate at the committee stage. The section of the Act that the hon. Member has alluded to has a general application to all sorts of situations.
What the Ministry of Energy has had to grapple with is that since the commencement of this particular SHEP project, there has not been a consideration of this matter, whether it is right in the context of the SHEP project to make provision for people who may, in one way or the other, be affected in the course of construction of this facility to their villages.
Mr. Speaker, I suspect the reason has always been that resources for this particular project have not been very big and that the various communities might have to make some sacrifices. What I have observed is that the contractors make as much effort as possible to ensure that damage to farming activities and farming products like cocoa, palm trees are reduced to the barest minimum. It is against this backdrop that I suspect that from 1989 there was no indication as to whether there must be a compensation scheme put in place.
Mr. Speaker, we have been thinking that, maybe, it is about time we came up with some sort of policy. Whatever the meagre resource that we have, something may have to be set aside for payment of compensation.
Some Members noted that SHEP-3 has not been fully completed and yet the SHEP-4 Phase 1 has begun. They also noted that in some communities, installed transformers are yet to be connected whilst other communities are unable to provide the low tension poles necessary for the completion of the final stage of Phase-3. They therefore urge the Ministry of Energy to strive to complete all the programmes under SHEP-3 before moving on to
SHEP-4.
The Deputy Minister for Energy explained that usually during the last phase of the SHEP-3, some of the communities are unable to procure the low tension poles for power to be connected for them as a result of lack of funds. This he said has contributed to the delays in the completion of some of the projects. He assured the Committee that steps would be put in place to address these concerns but these delays should not affect government programmes con-cerning the rural electrification.
He however encouraged Members to repor t any anomal ies in the implementation of the SHEPs in their various constituencies to the Ministry so that steps can be taken to address them.
Members further requested that the Ministry of Energy should furnish the Committee with a list of beneficiary communities and their districts under the
SHEP programmes that has been approved by the House. The Deputy Minister for Energy assured the Committee that the list would be provided.
The Committee was further informed that all taxes, duties, licence fees, stamps fees and other applicable charges related to the execution of the project and incurred in Ghana, will be borne by the Government of Ghana.
6.0 Conclusion
In view of the socio-economic importance of the facility and the urgency attached to the programme, the Committee respectfully recommends to the House to adopt its report and approve by Resolution, the Credit Agreement between the Republic of Ghana and the Fortis Bank of The Netherlands for an amount totalling nine million, eight hundred and ninety-nine thousand, five hundred and eighty-three euros (€9,899,583) for the Self-Help Electrification Project SHEP- 4 in accordance with article 181 of the Constitution and sections 3 and 7 of the Loans Act, Act 335.