Ghana seeks Dutch loan for Volta Lake dredging

Accra (Greater Accra) 21 Oct. '99

The government is seeking an 8.880 (eight point eight eighty) million-Guilder loan from ABN Ambro Bank, N.V. of the Netherlands, to finance the Volta Lake dredging and maintenance.

The project, estimated at 14.80 million Guilders, involves the procurement of appropriate dredging equipment and the removal of rock and sand, which have caused the main riverbed to shift at Debre, 32 kilometres down stream of the port of Buipe in the Northern region.

The loan agreement was laid before Parliament on Wednesday for consideration and possible ratification.

An accompanying memorandum signed by Mr Edward Salia, Minister of Road and Transport and Mr Fred Ohene-Kena, former Minister of Mines and Energy and dated 1 September, 1999, said Cabinet has considered the loan agreement and approved it for consideration and ratification by Parliament.

Under the agreement, the Dutch government will provide a grant of 5.92 million Guilders, representing 40 per cent of the project cost, while Ambro Bank will offer an 8.880 million-Guilder commercial loan, being 60 per cent.

The memorandum said it is expected that the annual maintenance and dredging cost of approximately 2.4 million Guilders, which is not included in the project, will be borne by the Volta River Authority to maintain the lake for power generation.

Under the terms of the agreement, the loan is to be repaid in seven years in a 14 equal consecutive semi-annual instalments.

The loan carries a 6.05 per cent interest rate per annum with a commitment fee of 0.5 per cent per annum, to be calculated daily on the undrawn amount of the loan and payable quarterly in arrears from the date of acceptance of the offer.

Maintenance fee is 0.375 per cent, calculated on the loan amount and payable within 30 days from the date the agreement was signed.

The memorandum explained, however, that the management and commitment fees will be borne by the Dutch authorities on top of the grant.

It noted that the removal of the Debre shoals will have tremendous impact on lake-transportation, with its attendant socio-economic benefits.

For instance, the project will enhance safe navigation on the lake and create efficient fairways for safe access to landing stages along the shore of the lake, thus reducing accidents.

Furthermore, cargo transportation, especially fuel from the south to the north, will be regular throughout the year, to optimise the use of 'tank farm' facilities provided for transportation of fuel, the memo said.

The economic development in the area will also be enhanced.

Giving a background to the loan agreement, the memorandum said following the formation of the Volta Lake in the early 1960s, the government endeavoured to provide facilities to promote commercial inland water transportation of goods and services to enhance socio-economic activities within the lake catchment area.

The memo said the Volta Lake Transport Company (VLTC), a subsidiary of the VRA, was subsequently formed in 1970 to augment and enhance transportation on the lake.

It said that VLTC entry onto the scene greatly improved commercial transportation on the lake.

The memo noted, however, that in recent times, due to inadequate rainfall coupled with other ecological factors, the water level of the lake has been decreasing continually, particularly in the dry season, when the water falls below the VRA minimum operating level.

This, the memo said, has adversely affected all season commercial navigation on the north-south service, due to the exposure of rocky and sandy materials around Debre.

Economic activities in areas along the lake corridor have also been so affected and consequently, operations and revenue projections of VLTC have not been met over the years.

GRi../