2.0 Background
Government has an objective to increase the existing power generation capacity of the country to ensure adequate and reliable power supply. It is projected that Ghana would require an installed generation capacity of 5,000 MW to meet her expected power demand as the country moves to attain a middle-income status.
The country presently has an installed generation capacity of 1,925 MW (excluding the 126 MW Emergency Power Plants). Ongoing and committed power generation projects by Government/VRA and Independent Power Producers (IPPs) are expected to increase the installed power generation capacity to 5,000MW by the year 2015. This 132 MW project therefore forms part of the planned installed power generation capacity of 5,000 MW in the medium-term.
3.0 Purpose of the Loan
The purpose of the facility is to finance the construction of a 132-megawatt (MW) combined-cycle thermal power Plant at a proposed site near the existing thermal plant complex at Aboadze in the Western Region.
4.0 Terms and Conditions
The terms and conditions of the facility are as follows:
Loan Amount: US$194,300,000.00
Interest Rate: US 6-M Libor+1.6 per cent
Grace Period: 2 Years
Repayment Period: 12 Years
Maturity Period: 14 Years
Insurance (repayment period): 4 per cent (semi- annually on
reducing balance)
Arrangement and Management Fees: 0.6 per cent (flat on loan amount)
Flexibility Fee: 0 .15 pe r cent (flat on loan amount)
Commitment Fees: 0.5 per cent (cal. on undrawn amount).
5.0 Observations
The Committee observed that the loan facility of US$194,300,000.00 covers the total project cost of one hundred and eighty- five million, four hundred thousand United States Dollars (US$185,400,000.00) and EDC insurance premium of eight million, nine hundred thousand United States dollars (US$8,900,000.00) for the first eighteen months or the disbursement period.
The insurance cover during the repayment period will however be charged on 95 per cent of the Principal At Risk (PAR) plus Interest Due (ID) at a rate of 4 per cent per annum.
The Committee also noted that works under the project would be covered by a Sovereign Guarantee provided by the Government of Canada.
It was noted that the engineering, procurement and construction of the project would be executed by Canadian Commercial Corporation (CCC), an
agency of the Government of Canada and their sub-contractor Magellan Aerospace Corporation of Canada. Magellan has previously built power generation facilities in Russia, Ukraine and Canada.
The Committee was informed that the 132MW plant to be constructed under the project will have the ability to use three (3) fuels, namely Light Crude Oil (LCO), Diesel no. 2 or Natural Gas. The plant would be made up of six (6) units thus making it highly reliable and flexible in delivering power at all times. Also, the combined-cycle nature of the plant would significantly improve fuel efficiency, thus reducing the cost of fuel required by about 33 per cent as compared to a plant of the same size in a simple-cycle mode.
The technical team from the Ministry of Energy informed the Committee that the plant, when constructed would make use of natural gas expected to be produced from Ghana's Jubilee Field by the close of the year 2010.
As to the level of local participation in the execution of the project, the Committee was informed that Ghanaian companies are expected to benefit from sub-contracts under the project.
These sub-contracts may include (but not limited to) site preparation and construction of fuel tanks.
The Committee noted that the Flexibility Fee would become applicable only when Government decides to opt for a fixed rate of interest as against the floating rate. (The floating rate being US 6M Libor + 1.6 per cent)
The Committee also noted that a legal fee of 0.08 per cent of the loan amount was provided in the agreement. That any legal
fee that should be submitted for payment should not exceed the above percentage.
Taxes
Clause 17 of the Agreement provides that any present or future taxes, levies, imposts, duties, deductions, withholdings, fees, liabilities and similar charges levied by any taxing authority in Ghana, as well as all bank charges, if any, on principal and/or interest and/or fees shall be borne in full by the borrower (that is the Government of Ghana).
Prepayment
The Committee was further informed that the Agreement permits Ghana to prepay the loan in advance of the repayment period under certain conditions.
Governing Law
The Agreement would be governed by the laws of the Province of Quebec and the federal laws of Canada.
1.0 Conclusion
In view of the relative favourable terms of the Agreement and the need for the country to augment its power generation capacity for accelerated development, the Committee recommends to the House to adopt this Report and approve by Resolution, the Credit Agreement between the Republic of Ghana and Societe Generale (Canada) (with insurance guarantee from Export Development Canada [EDC]) for an amount of one hundred and ninety-four million, three hundred thousand United States dollars (US$194,300,000.00) to finance the construction of a 132-megawatt combined- cycle thermal power plant at Aboadze in accordance with article 181 of the Constitution and section 7 of the Loans