Ghana+Infrastructure

=It Is Highly Likely That The Chinese Government Will Continue To Fund Ghanaian Infrastructure Projects In Exchange For Exports Over The Next Five Years=

Executive Summary:
Over the next five years, it is highly likely that Chinese investors will continue to heavily invest into the development of Ghana's infrastructure especially in projects that correspond to PNGSM. In 2009, China Development Bank (CDB) agreed to provide Ghana with a USD 3 billion loan intended for the development of Ghana's oil and natural gas sectors. This loan would be used for a selection of infrastructure projects including a natural gas processing plant. In order to pay for this loan, Ghana transferred their share of the Jubilee oil field (13.6 percent) over to UNIPEC Asia which guarantees China 13,000 barrels of oil a day for the next fifteen years. China EXIM Bank and Ghana also signed an agreement in 2010 for a USD 5.9 billion loan to be used for projects relating to transportation, sanitation, and education. Among the projects to be funded with this loan is a railway connecting the central region of the country to its northern border.

Discussion:
Over the past five years, Ghana has received approximately USD 12 billion in investments related to 10 infrastructure projects. While few have related directly to PNGSM projects within the country, the projects are being used to develop the transportation and electrical infrastructure in the country allowing for investments in PNGSM to require less initial investment.

In order to secure much needed PNGSM products, China has taken to trading infrastructure projects for exports from Ghana's PNGSM sectors. In 2009, CDB and the Ghanaian government signed an agreement in which Ghana would receive a USD 3 billion loan intended for the development of its natural gas and oil sectors and in exchange Ghana's share in the Jubilee oil field (13.6 percent) would be transferred over to UNIPEC Asia. This share in the Jubilee oil field would guarantee China 13,000 barrels of oil per day for the next fifteen years. This would total to approximately 750 million barrels at an estimated price of USD 6.4 billion. This deal has met criticism in the Ghanaian government, with detractors finding it unwise to pay approximately USD 6.4 billion for a USD 3 billion loan. The possible projects included in this package are: the refurbishing of railways and ports; irrigation infrastructure in the Accra Plains; coastal fishing harbors throughout the coast of Ghana; the upgrading of ferries, pontoons, and landing ports; natural gas infrastructure including a pipeline and processing plants; and assorted oil infrastructure projects. Of these projects only the natural gas processing plants have begun construction. Ghana contracted China Petroleum & Chemical Corporation (Sinopec) to construct and operate the facilities. There was a delay in construction when CDB failed to disburse the loan so Ghana would be able to pay Sinopec, but this issue was resolved in early 2013.

In 2010, a similar deal took place. China EXIM Bank signed off on a USD 5.9 billion loan intended for projects related to transportation, sanitation, and education. This loan is to be paid back by Ghana over the next 20 years in exports. Among the projects to be funded was a railway that would stretch from Ghana's central city of Kumasi through Tamale to the town of Paga on the Burkina Faso border. Ghana Railway Authority asked two Chinese companies, China Machinery Engineering Corporation and the Central Military Commission, to develop the project. The project began in 2012, however, as of 2013, concrete details on the deal have yet to be published.
 * Date || Cost (USD) || Location || Key Chinese Companies Involved || Description || Corresponds to ||
 * 2008 || 930 million || Awisam, Bunso, Tanoso, Sekyere Heman || Sino-Hydro || Construction of 4 250 megawatt dams || Misc[|.] ||
 * 2010 || 464 million || Korle-Bu || Modern Gold Refinery || Renovation of Korle-Bu Teaching Hospital || Misc[|.] ||
 * 2012 || 162 million || Northwest Ghana || China International Water and Electric Corporation || Loan for extension for electrificiation || Misc. ||

Analytic Confidence:
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, did not use a structured analytic method, worked alone, and collaborated with a team. The subject is moderately complex and the deadline was moderately difficult to meet.
 * Analyst:** Jared DeTal