China Development Bank provides $850 million loan for Western Corridor Gas Infrastructure Development Project (Linked to Record ID#2034, #60039, and #85282)

Project narrative

On December 16, 2011, China Development Bank and the Government of Ghana signed a $3 billion master facility agreement (captured via Record ID#2034). This agreement established two lending facilities: Tranche A and Tranche B. Tranche A is a $1.5 billion facility and any borrowings through this facility are undertaken with a 15 year maturity, a 5 year grace period, an interest rate of 6-month LIBOR plus a 2.95% margin, a 0.25% upfront fee, and a 1% commitment fee. Tranche B is a $1.5 billion facility and any borrowings through this facility are undertaken with a 10 year maturity, a 3 year grace period, an interest rate of 6-month LIBOR plus a 2.85% margin, and a 1% commitment fee. Both loan tranches (Tranches A and B) under the master facility agreement are collateralized against cash proceeds from the sale of crude oil from the Jubilee field. In December 2011, the Government of Ghana and China Development Bank signed an Accounts Agreement that established a Collection Account (CA), Debt Service Reserve Account (DSRA), and Owner Contribution Account in CDB’s Hong Kong Branch for the operation and management of the loan. Under the terms of the Accounts Agreement (which was amended on June 13, 2012 and June 21, 2013), the Government of Ghana (a) granted CDB a first fixed charge over all repayment accounts, including the CA, the DSRA, and the Owner Contribution Account; (b) agreed to maintain a cover of 1.5 times each repayment in the DSRA at all times (i.e., a debt service cover ratio of 1.5). CDB’s security interest in the charged assets, pursuant to the charge over accounts, continued to be in full force and effect, after the master facility agreement was amended in 2018. In 2011, Ghana National Petroleum Corporation (GNPC) and China International United Petroleum and Chemicals Co. (UNIPEC Asia Company Limited) also signed an Offtaker Agreement for the sale and purchase of crude oil to support repayment of the loan. Under the terms of the Offtaker Agreement, GNPC agreed to supply and sell 13,000 barrels of crude oil from Jubilee Field each day to UNIPEC Asia over a 15.5 year period. The proceeds from these oil sales were then to be withdrawn from Ghana’s Petroleum Holding Fund by BoG (as required by Ghana’s Petroleum Revenue Management Act) and deposited into the CA and the DSRA to facilitate loan repayment and provide sources of collateral. In the event the proceeds from crude oil sales under the Offtaker Agreement were insufficient for the Government of Ghana to meet its debt service obligations, the Ghana’s Ministry of Finance and Economic Planning (MOFEP) was also granted authority to transfer funds from the Annual Budget Funding Amount (ABFA) to an offshore escrow account for the purpose of servicing outstanding debts to CDB and/or meeting the Government of Ghana’s counterpart funding commitments. A Five Party Agreement (signed in December 2011 and amended on June 13, 2012 and June 21, 2013) between the Government of Ghana, Bank of Ghana (BoG), GNPC, CDB, and UNIPEC Asia Company Limited allows for provides the Government of Ghana the opportunity to use other sources of revenue to meet its debt service obligations. The Five Party Agreement also sets out the structure of the oil-backed borrowing arrangement and the key contractual obligations of each party under the arrangement, including the Government of Ghana obligation to open and maintain the transaction accounts, BoG’s obligation to ensure timely and legal transfers of repayments to CDB accounts and to open and maintain standby letters of credit, GNPC’s obligation to supply and UNIPEC’s obligation to purchase crude oil to support repayments, and the obligation of Ghana’s MOFEP to oversee and manage the subsidiary loans and projects approved through the master facility agreement. The cash balance of the DSRA was GHS 0 ($0) in 2013, GHS 415,877 ($136,753.55) in 2014, GHS 364,979,295 ($96,783,244.94) in 2015, GHS 366,604,322 ($92,926,496.66) in 2016, GHS 370,586,909 ($84,231,954.95) in 2017, GHS 370,586,909 ($78,960,839.70) in 2018, GHS 370,586,909 ($69,152,250.23) in 2019, GHS 370,586,909 ($64,710,992) in 2020, GHS 370,586,909 ($62,547,369.40) in 2021, and GHS 370,586,909 ($41,014,089.71) in 2022. The cash balance of the Owner Contribution Account was GHS 0 ($0) in 2013, GHS 41,642,584 ($13,693,403.20) in 2014, GHS 192,069,065 ($50,931,840.84) in 2015, GHS 206,380,064 ($52,313,012.09) in 2016, GHS 206,380,064 ($46,908,824.43) in 2017, GHS 206,380,064 ($43,973,337.31) in 2018, GHS 206,380,064 ($38,510,928.15) in 2019, GHS 206,380,064 ($36,037,588.88) in 2020, GHS 206,380,064 ($34,832,666.20) in 2021, and GHS 206,380,064 ($22,840,770.28) in 2022. The cash balance of the CA was GHS 0 ($0) in 2013, GHS 0 ($0) in 2014, GHS 9,576,037 ($2,539,321.94) in 2015, GHS 9,576,037 ($2,427,324.27) in 2016, GHS 9,576,037 ($2,176,569.91) in 2017, GHS 9,576,037 ($2,040,363.28) in 2018, GHS 9,576,037 ($1,786,907.44) in 2019, GHS 9,576,037 ($1,672,144.47) in 2020, GHS 9,576,037 ($1,616,236.05) in 2021, and GHS 9,576,037 ($1,059,811.96) in 2022. Under the terms of the master facility agreement, subsidiary loan agreements must be negotiated to secure financial support for any given project. Tranche A is captured via Record ID#2034 and Tranche B is captured via Record ID#85282. On June 13, 2012, China Development Bank and the Government of Ghana signed an $850 million subsidiary loan agreement — using the Tranche B lending facility — for the Western Corridor Gas Infrastructure Development Project (WCGIDP). The Government of Ghana then used the proceeds from this CDB loan to on-lend to Ghana National Gas Company, which is a state-owned enterprise that is responsible for operating infrastructure required for the gathering, processing, transporting and marketing of natural gas resources in Ghana. CDB made loan disbursements worth $192,695,000 in 2012, $316,408,644 in 2013, and $111,390,378 in 2014. CDB had disbursed $620,494,022 by the end of 2014. This project involved the construction of a natural gas processing plant in Atuabo that is capable of processing 150 million standard cubic feet of raw natural gas a day, a 36 km shallow-water offshore pipeline from Jubilee Field to the natural gas processing plant in Atuabo, a 120 km onshore pipeline from the gas processing plant in Atuabo within Ellembelle District to a thermal power station in Aboadze (Aboazi) in the Takoradi metropolis, a 75 km lean gas lateral onshore pipeline from Esiama to Prestea, a natural gas liquids export system in Domunli, a jetty for the export of natural gas liquids, a truck loading gantry, an offshore loading facility, and an operations & control office complex in Alabokazo. The WCGIDP is designed to generate employment, new infrastructure and economic growth for Ghana while providing electricity to the public at a much lower cost and enhancing the competitiveness of the country’s industries. The project also supports the nation’s goal to become a petroleum-processing hub and a preferred exporter of power in western Africa. Sinopec International Petroleum Services Corporation (SIPSC) was the contractor responsible for project implementation. The project commenced in July 2011. By the close of 2012, 104 km out of the 111 km onshore pipeline had been laid, 95% of earthworks at the Atuabo natural gas processing plant site were complete, the fabrication of equipment packages for the gas processing plant and some critical packages such as pressure regulating package and fuel gas package were near completion, approximately 8 km out of the 45 km offshore shallow water pipeline was laid. On September 16, 2015, the Atuabo natural gas processing plant was officially handed over to the Ghanaian authorities.