A consortium of yet-to-be-named local banks are expected to partly finance the Pullman Accra Airport City project, a Parliamentary report has revealed. According to the CEO of Ghana Infrastructure Investment Fund (GIIF), Solomon Asamoah, debt financing for the project will initially be sourced from a consortium of domestic banks during the project construction period.
“Upon the completion of the construction works, the debt will be replaced by a longer-term financing from the African Export-Import Bank,” he told the Finance Committee of Parliament.
This was contained in the report of the Finance Committee on the request for waiver of taxes (import duties, import and domestic VAT, import and domestic NHIL, and import and domestic GETFund levy) amounting to US$23.98 million on materials, plant, machinery and equipment to be procured by Platinum Properties Limited for the Pullman Accra Airport City Hotel and Serviced Apartments. The total cost of the project is estimated at about US$126m, with a debt-to-equity financing ratio of 0.75: 0.25, the report noted.
The project is a joint venture between Ghana Infrastructure Investment Fund (GIIF) and Inter-Afrique Holdings Limited (IAH). GIIF is a statutory fund established by the government to invest in infrastructure, including by leveraging private sources of capital. IAH, on the other hand, is the parent company of the Inter-Afrique Group, a Ghanaian-based business group formed in 1985 with activities spanning financial services, property development, mining supplies, and information technology.
The report explained that 59 percent of the equity contribution will come from the project sponsor, Inter-Afrique Holdings Limited (IAH), while the Ghana Infrastructure Investment Fund (GIIF) will contribute the remaining 41 percent.
Even though debate on the report has been concluded by Parliament, a decision on the resolution and approval of the tax waiver was deferred because the legislature did not have the numbers to approve it.
Deal faces opposition
During the debate on the report, the Minority Chief Whip, Mohammed-Mubarak Muntaka, argued that the granting of tax waivers further widens the gap between the rich and the poor. He maintained that the Minority was vehemently against the tax waiver in that it is a franchise that is “coming to Ghana and not the original hotel itself.”
The Member of Parliament also stated: “Government is dipping its hands into GIIF to get US$13m to support Pullman. We are stealing from the poor and enriching the rich.”
The government will earn an estimated VAT revenue of US$90m and US$26m in corporate taxes during the project’s first ten years of operation. Upon the project’s completion, the Airport City development enclave is expected to become Accra’s most preferred hotel destination. This will augment the aviation industry and help attract more high-profile business meetings and social visitors into the Ghanaian capital.