Blows over oil money

The decision by the government to amend clause 5 of the Petroleum Amendment Bill, which is currently before Parliament, has led to hot exchanges between the Minority and the Majority sides of the House. Clause 5, as it stands now, debars governments from using our oil reserves as collateral to secure loans from development partners, but the National Democratic Congress (NDC) government is seeking to remove this clause, and replace it with Future Receivables. Whereas the former deputy minister of energy in the Kufuor government, Mr. K. T. Hammond, insists the government was trying to mortgage our oil reserves to finance the STX Korean housing deal, a Deputy Minister of Finance, Fifi Kwetey, denies the charge, contending that the amendment only seeks to promote the future infrastructural development of the country. Speaking in an interview with The Chronicle on November 15 2010, Mr. K. T. Hammond argued that if the government claimed the amendment had nothing to do with the STX housing deal, then it should tell Ghanaians how they were going to raise funds to finance the project. According to him, he was aware of serious lobbying going on for the members of parliament (MPs) to support the new amendment by the very people who were promoting the STX deal, and that it would be out of place for anyone to argue that the STX deal was out of the equation. The STX Korean housing deal seeks to construct 30,000 housing units for the security agencies at the cost of $1.5 billion. Parliament has already approved the deal, but the implementation of the project was yet to start, due to certain developments that arose when the government and her Korean counterpart met at the Castle to sign the deal. Mr. Alban Bagbin, Minister for Water Resources, Works and Housing, had already granted several interviews, insisting that the deal had not been abandoned. But speaking in a follow-up interview with The Chronicle in Accra on Sunday, Mr. Fifi Kwetey denied that the amendment of clause five of the Petroleum Bill was meant to promote the STX deal. He accused K.T. Hammond of trying to be mischievous, "because he knows that the aim for the amendment is to promote the future infrastructural development of the country." According to Kwetey, the government had no intention to collateralise the oil reserves, but only future revenue receivables. He explained that should the government use the future oil revenue receivables as collateral secure loans, the donor agency cannot seize the oil reserves if the government defaulted in the payment Kwetey noted that the Kufuor government used proceeds from our cocoa as collateral for funds raised for the construction of the Bui Dam, and that it was the same method the NDC was also using. He contended that some of the minority MPs were opposing the new amendment, because they know that the NDC would use it to transform the country, which would make it impossible for them to return to power in 2012. K.T. Hammond however, denied this claim, insisting that the minority was only trying to protect the interest of the country. He also denied that the Kufuor government used receipts from cocoa to finance the entire Bui Dam project. According to him, the cocoa receipts were pledged for only five years, which covers the period for the construction of the dam. According to him, since the Bui Dam would generate its own income, the donors only asked the government to pay the interest on the loan, and they collateralised it with cocoa receipts for only five years. Production of oil from the Jubilee fields is expected any moment from now, with an initial production capacity of 80,000 barrels per day. This is expected to increase to 120,000 barrels per day in2012. This will rake in $1 billion revenue to the state. Source: The Chronicle