Africa Confidential, a Pan-African news magazine, claims Ghanaian MPs granted tax holidays and other investment incentives worth US$832 million to Meridian Port Services (MPS) without knowing the contract.
The incentives covered a period of 10 years.
According to the report sighted by GhanaWeb, in March 2016, the Mahama administration asked Parliament to approve US$982 million in tax reliefs for Meridian Port Services (MPS) over 10 years – a sum that shocked MPs. The total investment in a new container terminal was some $1.5 billion and the earnings in revenues for Ghana would be huge, fully justifying the waiver, the government said to initial scepticism in the chamber of Parliament, Africa Continental explained.
“The proposal went to Parliament’s Finance Committee, where both main parties are represented, before it came back to the chamber for ratification. The then New Patriotic Party MP for Old Tafo, Anthony Akoto Osei, demanded more information. The committee had not even seen the contract with MPS. MPS and the government may have realised then that they were asking for too much. The committee re-convened and when the waiver proposal came back to the floor of the house, the giveaway had come down suspiciously by around $150m, to $832m,” the Africa Confidential report indicated.
“MPs still objected. Mark Assibey-Yeboah, of the New Patriotic Party (NPP), then in opposition, asked why, if this project was so attractive on its own terms, it needed such a huge injection of resources from the taxpayer. ‘I call this the Meridian Port Services give-aways,’ he said, adding, ‘I submit that somebody got stuck with MPS and whatever they requested, he gave it to them.’”
It was so generous, Mark Assibey-Yeboah explained, that for every $1 that MPS invested Ghana was giving back 55 cents. Had the originally proposed waiver of $982m gone through, Ghana would have been giving back 89 cents in the dollar.
Kwabena Okyere Darko-Mensah (NPP-MP Takoradi), was said to be worried that he could not understand why, if the government was giving away roughly half the cost of the investment in tax waivers, it had not taken 50 per cent of the equity instead of 30%. Despite this, in a matter of a few weeks, the Ghana Government’s stake in the project declined to a meagre 15 per cent.”
During the debate, then Minority Leader Osei Kyei Mensah-Bonsu reportedly said: “It is not healthy for GPHA to have the shareholding of only 30% when the State is having to give away this much.”
Moments later, however, the NDC majority ensured the giveaway was voted through.
The report further read, “Ignorant of GPHA’s diminishing stake in MPS, Parliament was also not informed that MPS was taking out a 10-year $667m loan from the International Finance Corporation (IFC), the private sector arm of the World Bank, the ministerial inquiry report said. The omission of this material fact and other factors resulted in a tax waiver far in excess of the project benefits.”
“Another material fact Parliament did not know of is that the project cost was soon readjusted from $1.5bn to $1.1bn. This news seemed not to have reached Parliament either, so no adjustment in the tax holidays took place.”
Read below the full report.