CDB Loan Ghana will not mortgage gas to China- Petroleum Ministry

The NPP on Wednesday October 26, 2016, alleged that "the Mahama Cabinet has recently given approval to a proposal which they hope will entice the China Development Bank to reactivate the remaining $2 billion of the $3 billion Chinese loan.”

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play Minister of Energy-and Petroleum, Emmanuel Armah Kofi Buah
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The Petroleum Ministry has described as 'untrue' assertion by the New Patriotic Party (NPP) that Ghana intends to mortgage its lean gas to china.

The NPP on Wednesday October 26, 2016, alleged that "the Mahama Cabinet has recently given approval to a proposal [the mortgage of Ghana's gas] which they hope will entice the China Development Bank to reactivate the remaining $2 billion of the $3 billion Chinese loan.”

The party also warned that the country may be plunged into another power crisis if the NDC is retained in the upcoming election.

But the Petroleum Ministry in a statement signed by its Head of Communications, Edward Bawa, said there was no basis for the party's assertion.

There is no basis for the assertion that Ghana’s gas would be exported for $2 billion. All of Ghana’s gas are being used and would continue to be used in Ghana for power generation. We should not confuse the use of proceeds or revenues from the sale of gas or its derivatives to support financing arrangements with the actual sale of lean natural gas and liquids. It is ridiculous to say that Ghana’s gas would be sold to China,” it said.

“No natural gas would be sold to Chinese to facilitate the financing. Any excess lean gas which is not sold to power plants in Ghana would be dedicated to petrochemical industry development including fertilizer production to support Agriculture in Ghana. Any excess LPG or other natural gas liquids not used in Ghana can also be exported either to our neighbours or to any potential buyer,” the statement explained.

The statement follows an admission of the NPP's claims by the Finance Minister, Seth Terkper who also doubles as the Power Minister.

He, however, downplayed the interpretation of the NPP's claims in an interview with Citi FM Thursday.

According to him, it was only the gas going to the Atuabo plant only under the GNPC that is under consideration with the Chinese and not the whole Ghana's gas.

“The premise for the CDB facility, which is in tune with our self-financing loan strategy is that proceeds from any commercial project must be used to pay for any loans that are used to finance the project,” he told Citi FM.

“The payment was to be from revenue flows from crude oil which is sold on the international market at bench mark prices but crude oil prices fell and that source of financing the loan became inadequate,” Mr. Terkper said.

“So we had indicated that once the processes start, there could be other source of financing repayment for the facility. That is the discussion that we are holding now, to see how we can use the proceeds from lean gas and from other gas sources to finance any infrastructure that is built and not put the load for such infrastructure on the tax payer and increase public debt,” he concluded.

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