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

On December 16, 2011, China Development Bank and the Government of Ghana signed a $3 billion master facility agreement (captured via Project 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 tranches are collateralized against cash proceeds from the sale of crude oil from the Jubilee field, which the borrower was required to deposit in a debt service reserve account (DSRA). The cash balance of the DSRA was GHS 370,586,909 ($71,266,713) in 2019. [Note: A requirement of the master facility agreement was that the Ghana National Petroleum Corporation (GNPC) and the China International United Petroleum and Chemicals Co. (UNIPEC Asia) sign an offtaker for the sale and purchase of crude oil. Under the terms of this 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 deposited into a special account to facilitate loan repayment and provide a source of collateral.] 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 in #2034 and Tranche B is captured in #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. 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. $598.95 million of the $850 million loan was disbursed by the end of 2013. On September 16, 2015, the Atuabo natural gas processing plant was officially handed over to the Ghanaian authorities.

Additional details

1. This project is also known as the Atuabo Gas Project. The Chinese project title is 西部走廊天然气基础设施发展项目 or 加纳西部走廊天然气工 or 天然气基础设施建设项目 or 加纳天然气工程项目. The Atuabo Natural Gas Processing Plant is referred to as 阿图阿博天然气处理厂. 2. AidData has estimated the all-in interest rate that applies to this loan (3.586%) by taking average 6-month LIBOR rate during the month (June 2012) when the subsidiary loan agreement was finalized (0.736%) and adding a 2.85% margin. 3. The DSRA cash balance in 2019 is drawn from https://www.ifac.org/_flysystem/azure-private/Ghana-financial-statements.pdf. The USD value of the cash balance is calculated by apply the average GHS-to-USD (5.9-to-1) exchange rate in calendar year 2019.

Number of official sources

14

Number of total sources

18