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STX – Acting Before We Think

STX – Acting Before We Think

Written by IMANI Ghana Monday, 26 July 2010 13:07

When we initially raised concerns about STX, we were ignored, persistence however paid off and now people realize what a bad deal we were being run into. Even the minority in parliament was criticized for not flagging the obvious problems earlier; well they finally got it and succeeded in getting it withdrawn. There’s more.

The problems with STX are myriad, whichever way you look at it STX is such a bad deal, it casts a very bad shadow on us as a people, especially on our leaders ability to analyze and judge right. In raising issues however we had to be selective to ensure we pointed out pertinent actionable details, hence our resort to pointing out the incomplete documentation, the Oil Swap, the bloated price etc. These however do not take away the biggest and most serious problem we couldn’t raise in the earlier in order not to complicate things.

We have noted with surprise government’s intention to reintroduce STX, and wonder what the fetish is about this deal which makes the government prepared to sacrifice everything for it, we are also surprised that government seems incapable of even simple analysis or seeing the horrible problems bedevilling this deal, and is determined to implement it. Very little analysis would reveal that this deal is almost incapable of being implemented successfully.

Financially and technically it is a mess, and as a national priority it will come after the more serious problems of Water, Health etc, even when it comes to the real issue of whether to house security agencies such as Police, (not Army), in barracks or not, the thinking is pointing clearly to a reversal of that paradigm, it is not smart to remove police from the communities they are supposed to police; even the colonial authorities who did that here, (in order to break social links and facilitate the use of police against their own people) don’t do that in their country!

It is also interesting to note that The Government has stated in the 2010 budget, that it will build ‘tent cities’ in the communities to house Police, and bring them closer to the people! Why take the people from the communities and then spend money to build tents to take them closer to the communities? Who said every police recruit doesn’t have a home before applying to join the police?

Well, back to STX, The problems are many, exposing only a few led to the withdrawal. Some mentioned issues were not even fully exhausted, for example, issues such as value for money, repayment and retirement of the sovereign guarantee, have not been fully gone into. There is still what I believe is the fundamental issue, -‐ Where does STX feature in our National Development Plan or strategy? Do we have, and use Planning at all?

How does a country enter an agreement, which is one of the biggest in its history, when it is not part of any long, medium or short-‐term plan? No previous plan captures this project; it is not featured in any national strategy. One would expect that a project, which could potentially have serious effects on our economy would be well thought through before it would even pass Cabinet, but apparently even Cabinet did not see this project in detail.

Note that these houses won’t be sold so they are sunk costs to be charged on the national purse. There is no plan for funding this project by government, i.e. there is no plan as yet to raise the money to pay for the security houses (if there is, Government owes it to the public to disclose how), it means this $1.5 billion will end up in our national debt in the next 5 years, and have a serious effect on our currency, prices and the whole economy, it can trigger a serious depreciation which will make the whole redenomination exercise totally useless.

On the other hand, if we properly structure this project it could be a stimulus to the economy, but must admit it must be very different from the current plan.

We must also note the following:

There are currently no plans with the utilities to extend utility services to a new settlement of 30,000 homes (the size of Sakumono). Indeed it is not possible to extend water and electricity to this new settlement under current situation, and if government forces the utilities to do so, it would seriously disrupt ongoing projects and plans.

It must also be noted that government doesn’t have the funds to deliver on its commitments under this deal. Given our current revenues and obligations, the state cannot fund the off site infrastructure required under the STX deal. It is important for government to explain how it would do this.

We must note that the structure of the deal is such that if government doesn’t do these things, it is grounds for repudiation of the whole deal by STX. In other words, STX can do a third of the works, and then demand the infrastructure or refuse to continue; pack off to Korea, and leave us to pay the money borrowed on our Sovereign guarantee, and we can do nothing, no Insurance covers this! The other option would be for government to ask STX to build the offsite infrastructure and bill for them; this would allow STX to bill on extremely high handed terms, which would make this deal even worse for the economy. We would like government to show where it would raise the funds to build the off site infrastructure it is agreeing to do.

Why would we sign a deal we cant afford, which we cannot honour, when we have not thought through it, and when it has serious potential to disrupt our economy? Why would we do this just because a private foreign firm with an agent of no significant track record has asked us to? Or is there more, why is STX even an issue?

It has been said earlier that STX seems like a stimulus package for a distressed Korean company, which required a gullible country to underwrite it; and Ghana seems to fit the need. That is very offensive to straight thinking Ghanaians, why do we entrench our poverty to be some people’s ladder to wealth?

It is even more baffling that when it comes to building Barracks and affordable homes we don’t need any help, so why have we not thrown this STX irritation away, and if we really need to build houses as a matter of urgency, why not call our Construction and Real Estate people and get them to work as we did with all the other estates in Ghana?

In many ways STX is a test of the leadership and people of this country, lets see how we fare.

www.ImaniGhana.org

Comments

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STX madness

Korbla KUDA (41.210.1.xxx) 2010-07-27 12:58:26

While I was away from home one day, a credit company came and sold a mobile phone Nokia 1100 to a neighbour at GhC2,200 for six months instalment payment at a time when the market price was GhC40! This is exactly what our vice president is leading STX to do with Ghana, sth even the 'profligate' NPP did not do. Social democrats indeed! this

Ing.

Kwame Adu (41.66.251.xxx) 2010-07-28 10:28:54

So if government can guarantee such a deal, why not do so for our local companies. This deal must be stop if the facts being presented by Danquah institute is true.

I think it will be good, if they create their own company and award this contract to them selves if for nothing at all. That way, this big money will stay in our country.

Government should be very!!! careful for God is watching.

thank you.