Govt optimistic

But government officials are more optimistic about the loan. Reuters report quoted the Chief Executive Officer of Ghana National Gas Co. (GNGC), Dr. Adjah-Sipa Yankey, as saying a $700 million gas project, which the loan will finance, would be able to pay off the $3 billion loan after five years.

There has been denial from government over some of the concerns raised. Ghana Deputy Minister of Budget Seth Terkper told media that the claim that the government of Ghana will pay as much as $2.3 billionmore for the loan it is contracting from the Chinese Development Bank in addition to the principal and interest is false.

Terkper also denied the allegation that the oil was being collateralized. "Ghana's oil is not being collateralized. The proceeds from the off-take will be paid into the Bank of Ghana just like any sale of crude oil and out of the proceeds that go into the Petroleum Holdings Account, the distribution will be made into the Stabilization Fund, Heritage [Fund] and [the] annual budget funding amount."

He explained that the part of the proceeds that go into the Consolidated Fund would be the only resource that will be used in servicing the loan.

Terkper also denied claims that government has set the price at which the Chinese will buy the country's oil at 85 dollars a barrel, well below the prevailing market price. Minority Spokesperson Dr. Matthew Opoku Prempeh had earlier accused the government of pegging the cost at an unreasonably low price compared to the prevailing crude oil price.

Terkper, however said the volatility in crude oil price makes it unrealistic to fix the price, adding that the "off-taker agreement calls for the use of average prices that will be adjusted periodically."

Ghana benefits

For some Ghanaians, the benefit of the loan far outweighs the concerns being shared by the minority. Samuel Okudzeto Ablakwa, Deputy Minister of Information told the media in March that 80 percent of the loan amount would be used on the development of Ghana's western region on a railway system, road infrastructure, the aluminum industry as well as upgrading the area's satellite oil area.

Specific initiatives to benefit Ghana include the Western Corridor Gas Infrastructure Project, Western Corridor "Petroleum Terminal" Project and Western Corridor "Oil Enclave" Toll Road Project.

Ghana's western region makes a major contribution – almost 55 percent - to the country's economy due to important industries like cocoa, mining and natural rubber. Recently oil and gas were found there and it is in desperate need of infrastructural development, said Ablakwa.

(Reporting from Ghana)