Yesterday in Parliament, the Member of Parliament for Bantama, Cecilia Dapaah, questioned the Minister of Water Resources, Works and Housing, Alban Bagbin, over the current fate of the controversial STX deal. Last year, the Government of Ghana reached an agreement with STX of Korea, through its subsidiary in Ghana, for the construction of 200,000 houses in Ghana within a period of five years at a total cost of US$10 billion, and Parliament later in August last year approved an initial off-take agreement for the construction of 30,000 housing units for the security forces at a cost of US$1.5 billion.

The Minister’s response yesterday, captured in Hansard, was that work will start this month and that a consortium of banks, led by Barclays Capital, have secured the funds to undertake the project. In May he said Stanchart was lead bank in that syndication!

The STX story has changed several times that if it were a witness in a court case its evidence would have been rendered unreliable and even contemptuous of the court. But, poor Bagbin, who as sector Minister, inherited probably the worst expensive deal ever contracted by any government of the Republic, would not leave it alone. He has done more than the now half-hearted Koreans in his attempts to find the money and get the project started.

But, what he would not admit is that no financial institution worth its shareholders’ funds would touch this shady deal with a barge pole. The New Statesman does not doubt Mr Bagbin’s commitment to get a laudable project to provide decent accommodation for Ghana’s security forces off the ground. In fact, we commend him for that. Our disappointment is to do with his stubbornness to by all means push this dubious deal through.

There is nothing disgraceful for the Minister now to admit that this deal that he inherited from his predecessor, Abongo, was a bad deal. But, that he has identified credible sources of funding to undertake a similar project and, “Parliament, here is a new deal, approve of it and let’s get on with it.”

This STX deal stunk from the onset. Which competent government, with the nation at heart, would agree to a $10 billion deal for 200,000 houses (at a rough average cost of $50,000 per unit) without knowing the actual cost per unit, the designs, the texture of land and the kind of offsite infrastructural works required? Which Parliament, worth its fiscal scrutiny status, would approve of a loan, equipped with terms and conditions, including a $266 million unusual political risk insurance premium, without being satisfied of the actual identified source(s) of funding?

As our sources in the City of London tells us there is very little hope of the deal in its current state receiving funding from the City without some bogus creative banking going on or without it being returned to Parliament after new terms and conditions are negotiated.

We believe Government may even stand tall if it were to gather the courage to present a new deal to the House. This is because no such new deal could be accompanied by that strange $266m political risk insurance premium. That alone is enough for Ghanaians to reconsider seeing this housing project in a new positive light.

We are therefore joining the call for Government to bring back to Parliament the US$1.5 billion suppliers' credit facility agreement with STX (Gh) Ltd for the construction of 30,000 housing units. As shown, subsequent difficulties with efforts to raise funding, changes and re-arrangements with sources of funding have altered fundamentally the integrity of the terms and conditions of the agreement which Parliament approved last August.

As the Danquah Institute told the New Statesman sometime back, “Credit facility agreements are ordinarily not presented to Parliament for scrutiny and approval without an identified source(s) of funding and it is dangerously speculative and suspicious to present any such agreement with specific terms and conditions when sources of funding are yet to be identified. Indeed, such a practice compromises Government's leverage to negotiate a good deal on behalf of the country and that is what we are afraid has happened in this STX case.”

It is recalled that in September 2010, the Deputy Finance minister, Seth Terkper, defended the STX deal, claiming that the agreement came with identified sources of financing, including the South Korean government. However, this has proven not to be the case.

We support the view that Parliament must satisfy itself with the consistency of the current state of the agreement with what it approved in August 2010 and to further satisfy itself on the current propriety of the exorbitant and inessential $266 million political risk insurance originally demanded by the Koreans.