Mr Speaker, I present
the Committee's Report.
1.0 Introduction
The Term Loan Facility Agreement
Amongst the Government of the
Republic of Ghana (represented by the
Ministry of Finance). Deutsche Bank
AG, Frankfurt (as Arranger and
Original Lender), an TMF Global
Service (UK) Limited (as Facility
Agent) for an amount of thirty-eight
million, nine hundred and twenty-
eight thousand. eight hundred and
ninety-eight euros (€38,928,898.00) to
Finance the Construction and
Equipping of 40-Bed District Hospitals
at Ayensuano, Effiduase and Offinso,
and the Completion and Equipping of
Old Tafo Maternity and the Kumasi
South Maternity Blocks was the
presented to the House on Monday 20
December, 2021 in accordance with
Article 181 of the Constitution and
Section 56 of the Public Financial
Management Act,/2016, Act 921.
Pursuant to Article 103 of the 1992
Constitution and Orders 169 and 171 of
the Standing Orders of the House, the
Agreement was referred to the Finance
Committee for consideration and report.
The Comrnittee subsequently met and
discussed the Agreements with the Hon.
Deputy Ministers for Finance and Health,
Dr. John Ampontuah Kumah and Alhaji
Mahama Asei Seini as well as officials
from the Ministries of Finance and
Health.
The Comrnittee hereby submits this
report to the House pursuant to Order 16
l (i) of the Standing Orders of Parliament.
The Committee is grateful to the
Deputy Ministers and officials from the
Ministries of Finance and Health for
attending upon it and assisting in the
deliberations.
2.0 Reference
The Comrnirtee was guided by the
following documents during its delibera-
tions on the Agreements:
▪ The 1992 Constitution of the
Republic of Ghana.
▪ The Standing Orders of the
Parliament of Ghana.
▪ The Public Financial Management Act, 2016
(Act 921).
Loan Facility Agreement between the
Government of the Republic of Ghana
(represented by the Ministry of Finance)
and the Czech Export Bank (Ce ska
Exportini Banko A.S.) of the Czech
Republic for an amount of thirty six
million, thirty thousand, six hundred and
Fifty Euros (€36,030,650.00) and Export Credit Guarantee of three million, seven
hundred and thirty thousand, six hundred
and fifty euros (€3,730,650.00) from Export Guarantee and Insurance
Corporation of the Czech Republic to
finance the Construction and Equipping
of 40 Bed District Hospitals at
Ayensuano, Effiduase and Offinso and the
Completion and Equipping of the Old
Tafo Maternity and the Kumasi South
Maternity Blocks.
3.0 Background
The increasing rate of population
growth across the country has exerted
enormous pressure on the existing health
facilities, stretching them beyond their
operational limits and thereby resulted in
increase in outpatient visits to the various
hospitals in all the regions of Ghana.
However, programmes to address health
infrastructural development on the other
hand, have not kept pace with the
growing demand for health services as a
result of increasing rate of population
growth in the country.
This has led to congestion and
pressure on the utilisation of the existing
health facilities, including health
workers, as they operate above their
established capacities. These challenges
are further compounded by inadequate
funding for the Ministry of Health's
capital investment plan and the rising cost
of maintenance of the traditional health
infrastructure.
In response to these challenges, the
Ministries of Health and Finance
therefore entered into an Agreement with
Deutsche Bank AG, Frankfurt and TMF
Global Service (UK) limited for an
amount of €38,928,898.00 to finance the
construction and equipping of three (3)
40-Bed District Hospitals at Ayensuano,
Effiduase and Offinso, and the
Completion and Equipping of Old Tafo
Maternity and Kumasi South Maternity
Blocks. The Projects forms part of
governments overall objective to improve
health infrastructure, and increase access
to quality healthcare delivery across the
country.
4.0. Project Objectives
The overall objective of the project
is to increase access to healthcare
delivery through expanding the
capacities of existing health facilities
and providing new facilities in Districts
with limited access to health
infrastructure. The key objectives of
the projects are as follows:
i. Bridge the equity gaps in geographical
access to health services;
ii. Ensure sustainable financing for the
health care delivery and financial
protection for the poor;
iii. Improve efficiency in governance and
management of the health services;
iv. Enhance national capacity for the
attainment of the health related MDGs
and sustain the gains;
v. Intensify prevention and
control of non-commu-
nicable and other commu-
nicable diseases.
5.0. Justification For Government Action
Government intends to secure the
credit facility to facilitate the
construction, retooling and equipping
of selected health facilities to address
the gaps in healthcare infrastructure,
particularly in Districts without
Hospitals. The aim of the construction,
retooling and supply of equipment to
the selected hospitals is to address the
shortfalls in the provision of infra-
structural facilities and biomedical
equipment including the problem of
maternal/neonatal care services, patient
transport and handling in health
facilities, patients lying on the floor,
laundry services, sterilisation services,
dietetic services, emergency care
services, poor quality of electricity
supply, water supply and where
possible address medical oxygen
supply in selected hospitals.
The projects are also in fulfilment
of the government's commitment to
enhance healthcare infrastructure to
provide universal healthcare services to
oil citizens in Ghana.
5.1. Terms and Conditions of the Loan
The entire project cost for the
Construction of three (3) 40-Bed capacity
Hospital and expansion work on the
Maternity Block of two hospitals would
be financed by a Term Loan Facility from
Deutsche Bank AG, Frankfurt with
insurance cover from African Trade
Insurance (ATI) with the sum of thirty-
eight million, nine hundred and twenty-
eight thousand, eight hundred and ninety-
eight euros (€38,928,898.00). The terms
and conditions of the Credit Facility are
as follows:
7.0. Project Description And Scope
The project seeks to expand health
infrastructure in line with the govern-
ment's agenda to improve access and
quality of health services across the
country. A successful implementation of
the project will result in increasing access
to health services through the con-
struction and equipping of three
additional Forty-Bed District Hospitals in
three Districts. The project also intends to
revamp, retool and supply hospital
equipment to selected hospitals.
Also, part of the project fund would be
applied to renovate and revamp existing
structure in the selected hospitals and for
procurement and installation of medical
equipment and other accessories in the
maternity wards of Kumasi South and
Tafo Hospitals in Kumasi. Again, part
Terms and Conditions Deutsche Bank Facility Facility Amount €38,928,898.00 Grace Period 2 years Repayment Period 8 years Tenor 10years Interest Rate 7.5% p.a. (fixed) Upfront Fee l .50 % f1at of the facility e €570.000.00
(Financed)
Agency Fee €170,020.00 {Financed)
Legal Fees (Slaughter and May) €88,878.00 (Financed)
of the facility would be applied to the
provision of associated residential
accommodation at Abrepo and for the
provision of post construction training
for staff.
The scope of the project covers the
construction and equipping of 40- Bed
District Hospitals at Ayensuano,
Effiduase and Offinso, and the com-
pletion and equipping of Maternity
Blocks at the Old Tafo and the Kumasi
South hospitals. The two key com-
ponents for the Project are as follows:
a. Constructions and equipping
of 3 No. 40-Bed District Hospitals
at Ayensuano, Effiduase and
Offinso, which will comprise the
following activities:
i. Design ond Construction of 3
40-Bed District Hospitals.
ii. Procurement and installation
of medical equipment and
accessories.
iii. Installation of ICT equip-
ment.
b. Revamping, retooling and
equipment supply for the
selected Hospitals
i. Completion and equipping of two maternity Blocks.
ii. Supply and installation of ICT Equipment and electro-
nical systems.
Supply and Installation of medical and
non-medical furniture and equipment.
Attachment: Please find attached to
this report is details of the project scope.
Refer in Columns 165-174
8.0. Observations
The Committee having critically
examined the amended and restated
Agreement made the following obser-
vations:
8.1. Parliamentary Approval
The Committee noted that Parlia-
ment at its Twenty-Third Sitting of the
Third Meeting held on Saturday, 7th
November, 2020 approved by
resolution, the Loan Facility Agree-
ment between the Government of the
Republic of Ghana (represented by the
Ministry of Finance) and the Czech
Export Bank (Ceska Exportini Banka
A.S.) of the Czech Republic for an
amount of thirty six million, thirty
thousand, six hundred and fifty euros
(€36,030,650.00) and Export Credit Guarantee of three million, seven
hundred and thirty thousand, six
hundred and fifty euros (€3,730,650.00) from Export Guarantee and Insurance
Corporation of the Czech Republic to
finance the Construction and Equipping
of 40-Bed District Hospitals at
Ayensuano, Effiduase and Offinso and
the Completion and Equipping of the Old
Tafo Maternity and the Kumasi South
Maternity Blocks.
The project was to be executed by
Messrs MZ Liberec with Golden
Mainland Ghana Limited as Local
Partners through a supplier credit
agreement. Officials from the Ministry
of Finance informed the Committee
that, the facility was not signed due to
the inability of the main contractor,
Messrs MZ Liboerec, to provide
performance security and advance
payment guarantee for the project.
In July, 2021, Messrs MZ Liberec,
the main contractor, pulled out of the
project thereby rendering the suppliers
credit invalid. The supplier credit
facility was subsequently terminated
and replaced with a Loan Facility from
the Deutsche Bank. To ensure the
execution of the projects for the benefit
of the Communities, the Government of
Ghana through the Ministry of Finance
has entered on Agreement with
Deutsche Bank for a credit facility
amounting to €38,928,898.00 to finance
the project.
The Committee therefore recommends
to the House to rescind its earlier decision
on the approval granted for the Loan
Facility Agreement and the Suppliers
Credit Facility and approve the replace-
ment facility to finance the projects.
On whether the Ministry has
incurred cost as a result of the decision
by Messrs MZ Liberec to pull out of the
contract, the Deputy Minister for
Finance assured the Committee that, no
cost was incurred. She indicated that
the insurance component was also
financed through the loan Facility with
Czech Export Bank {Ceska Exportini
Banko A.S.). Because the facility could
not fall through, the insurance com-
ponent was not paid.
8.2. Financial Impact
The Committee sought to
understand the impact of the facility on
the country's debt stock. The Deputy
Minister however assured the Com-
mittee that the facility was factored into
government's medium term debt
strategy and as a results, forms part of
governments borrowing plan for the
medium term as published under
Appendix 10c of the Budget Statement
and Economic Policy of the
Government for the 2022 financial
year. She indicated that the projects
forms part of government's priority
projects selected for debt financing in
2022 and the estimated debt service
cost will form part of the debt service
projections for the year. The drawdown
on the facility also forms part of the
determination of the projected budget
deficit for 2022.
8.3. Benefits of the Project
The Committee observed that there
is continuous increase in Out-Patient
visits to various hospitals in all the
Regions of Ghana but the development
of health infrastructure has not kept
pace with the demand. The country has
216 administrative Districts of which
only 109 have District Hospitals
leaving some 107 District without
District Hospitals. This has led to
congestion and pressure on the
utilization of most of the adjoining
health facilities compelling them to
operate above their established
thresholds.
This situation affects patients'
satisfaction and the quality of health
service delivery in the Districts. The
project therefore seeks to construct and
equip three District Hospitals in the
selected districts to improve health
service delivery.
9.0. Conclusion
The Committee after a careful
examination of the Agreement is
convinced that the facility, when
approved will help expand access to
health services to be in line with
governments overall agenda to improve
health infrastructure in Ghana. The
Committee therefore recommends to
the House on the following:
1. To rescind its decision on the
approval of the Loan Facility
Agreement between the
Government of the Republic of
Ghana (represented by the
Ministry of Finance) and the
Czech Export Bonk (Cesko
Exportini Banka A.S.) of the
Czech Republic for an amount
of thirty six million, thirty
thousand, six hundred and fifty
euros (€36,030,650.00) and
Export Credit Guarantee of three
million, seven hundred and thirty
thousand, six hundred and fifty
euros (€3,730.650.00) from
Export Guarantee and Insurance
Corporation of the Czech
Republic to finance the Construc-
tion and Equipping of 40-Bed
District Hospitals at Ayensuano,
Effiduose and Offinso and the
Completion and Equipping of the
Old Toto Maternity and the
Kumosi South Maternity Blocks
and
2. To approve the Term Loan
Facility Agreement Amongst the
Government of the Republic of
Ghana (represented by the
Ministry of Finance), Deutsche
Bank AG, Frankfurt (as Arranger
and Original Lender), and TMF
Global Service (UK) Limited (as
Facility Agent) for an amount of
thirty-eight million, nine hundred and
twenty-eight thousand, eight hundred
and ninety-eight euros
(€38,928,898.00) to Finance the
Construction and Equipping of
40-Bed District Hospitals at
Ayensuano, Effiduase and
Offinso, and the Completion and
Equipping of Old Tafo Maternity
and Kumasi South Maternity
Blocks in accordance with
Article 181 of the Constitution,
Section 56 of the Public
Financial Management Act, 20 l
6 (Act 921) and Order 169 of the
Standing Orders of the Parliament
of Ghana.
Question proposed.
Ranking Member of the Committee
(Dr Cassiel Ato B. Forson): Mr Speaker,
I rise to second the Motion that was
moved by the Chairman of the Finance
Committee.
Mr Speaker, in doing so, I would like
to state that what came before us was a
loan agreement between the Government
of Ghana and the Deutsche Bank. The
Commercial Agreement between the
Government of Ghana and the contractor
did not appear before the Finance
Committee, and we were not called upon
to consider the commercial agreement.
So, our job was to look at the loan
agreement between the Government of
Ghana and Deutsche Bank, which is a
reputable company.
GoG-Deutsche Bank AG-TMF Global
Services (UK) Ltd Agreement for the
Construction and Equipping of District
Hospitals —
Mr Speaker, the terms that were
presented to us were that the repayment
period and the grace period of the loan is
10 years. This means that it has a two
years' grace period and a repayment
period of eight years, giving us the tenure
of 10 years. The interest rate is 7.5 per
cent fixed.
Mr Speaker, we were told that there is
going to be an upfront fee of 1.5 per cent
per annum and an agency fee of €170,
020. According to the Ministry of
Finance, the legal fees would be paid to a
company called Slaughter and May, and
they are going to pay an amount of
€88,878 for the purposes of the
structuring of the Agreement.
Mr Speaker, I believe that this loan is
an expensive one, but I recognise the fact
that the Government of Ghana has signed
an agreement with the company, and
there is the need for us to ensure that the
contract is actually executed. So,
inasmuch as I believe that it is an
expensive loan, considering what we had
approved earlier, I still think that we
should approve it.
Mr Speaker, however, there are
underlining concerns, which have to do
with the company in question that is
executing this Agreement. I recall, that
when the matter appeared before us in
November last year, there were issues
that the company that is constructing the
Ayensuano Hospital is not credible
enough to do the job, and that position
still holds. According to the members of
the Committee, we were told that this
company is a Human Resource (HR)
company, and they do not have any
background referencing to the con-
struction of hospitals, but that is not what
we are discussing.