Press release on Thursday public forum on Govt/STX Korea Housing Deal

Korean Company, STX Group in September 2009 won a $10 billion order from the Ghanaian government to build 200,000 homes in Ghana. The project involves the construction of homes in major cities in Ghana from 2010 to 2015. Under the agreement the Ghanaian government will buy 90,000 units in advance as a back-up plan for the project and HFC Bank will guarantee 100 percent housing loans to help individuals who hope to buy the remaining 110,000 units.

On Thursday, June 3, 2010, Parliament was scheduled to pass a motion on a supplier's credit facility between STX Korea, the parent company, and the Government of Ghana. This credit facility, to be supported by Ghana’s sovereign guarantee plus the option of the country’s oil, is for the initial construction of 30,000 housing units (with more than 15,000 of them being one-bedroom apartments) as part of a 90,000-unit off-taker agreement by the Government of Ghana at a total cost of US$4.5 billion. This puts the average cost per unit at US$50,000. Under this EPC agreement, the design, engineering, procurement, construction, commissioning and inspection will all be done by STX.

This public forum seeks to analyse the viability of this housing project. The objective is to seek stakeholder input and offer opportunities for interested parties, especially GREDA, AGI, STX Ghana and the sector ministry with its allied departments and agencies to state their cases for why they support the project or otherwise. And ultimately, to impress on Parliament to put a hold on granting approval to the US$1.5 billion Supplier’s Credit Facility Agreement before the House and for Government to explore other options that will ensure greater local content and better value for money.

Issues to be discussed will include but not limited to:

1. Is it ‘affordable’ for the ordinary Ghanaian worker even if acquired through mortgage financing?
2. Why can’t this project be undertaken by Ghanaians, with Ghanaians and for Ghanaians?
3. Can Ghanaian construction firms not be empowered and helped to undertake this project with similar off-taker facility from Government, even if they have to form consortia?
4. If Government is prepared to take out such a credit facility for a Korean company to build houses in Ghana, then why is it not prepared to do so for local companies?

Among critical questions that answers will be sought for are:

1. Will the Government and people of Ghana get value for their money?
2. Where will STX Group be sourcing funding from - given their 7.7 trillion KRW (US$6,406,400,000) debt?
3. How is Government raising the $4.2 billion for the 90,000 houses?
4. Is it prudent to mortgage our yet-to-be drilled oil when we are still undecided on how to utilize the oil revenue?
5. Why is Government not seeking funding from the capital market to support Ghanaian companies instead?
6. Can Ghanaian Real Estate companies form consortia to execute such a project?
7. How ‘affordable’ is a unit price of US$50,000 per housing unit?
8. Will HFC have the financial muscle to mortgage-finance the remaining 110,000 housing units, one hundred percent (100%)? Invitations have been extended to representatives from various stakeholder groups: concerned Ministries, Departments and Agencies (MDAs) of Ghana; Ghana Real Estate Developers Association (GREDA) membership; Ghana Institute of Planners (GIP) Ghana Institute of Architects (GhIA); Ghana institute of Engineers (GhIE); College of Architecture and Planning, KNUST; Building and Road Research Institute (BRRI); STI Ghana; Members of Parliament; Financial Institutions; International Development Agencies; Association of Ghana Industries (AGI); and other concerned bodies and groups.

The details of the programme are as follows: Date: Thursday, June 3, 2010 Time: 9:30am Venue: British Council Hall

For more enquiries, please call 0266418666.

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