01.09.2020 Politics

Agyapa Deal: Jinapor, Mercer Fight Over Lack Of Transparency In Royalties Valuation

Agyapa Deal: Jinapor, Mercer Fight Over Lack Of Transparency In Royalties Valuation
LISTEN SEP 1, 2020

The Minority in Parliament continues to harbour fears that there has been an undervaluation of the royalty rights in the Agyapa Royalties deal.

Speaking on Citi TV's The Point of View, former Deputy Power Minister, John Jinapor complained that the government held back key details on the value of the company despite requests in Parliament to help judge the prudence of the deal.

“Deputy Finance Minister [Charles Adu Boahen] looked into our face and told the people of Ghana that it is confidential and that he can't release it to the people's representatives.”

The Minority boycotted the approval of the deal in Parliament saying it was too opaque and that the state was in danger of being shortchanged.

The government will be floating 49 percent of Agyapa Royalties Limited but Mr Jinapor had questions about the projected cash flows.

“It is the projected cash flows that will tell us whether the business is worth undertaking or not.”

“So where is the dividend policy? They say they can’t provide that. If you want to list on the stock exchange, we need to see the prospectus,” Mr Jinapor added.

Defending the actions of the government, Andrew Egyapa Mercer, the Sekondi MP, said the state was in the process of building a prospectus for the deal and that “it was premature to make those documents available.”

“They need to go through some regulatory processes at the London Stock Exchange before the document is available for the public,” he said on The Point of View.


Andrew Egyapa Mercer, the Sekondi MP

He also suggested that the government was wary about information on the deal being leaked from Parliament.

“They don't want a situation where these documents will be made available to us and the document will be found out there in the public domain.

The state could have been more transparent

Also speaking on The Point of View, Theo Acheampong, an Energy Economist and Political Risk Analyst, noted that the State could have put in place measures to ensure the security of the information amid calls for transparency.

“The State could have provided those details to Parliament. A lot of these documents go to Parliament and I'm sure there is some confidentiality and some disclosure around that,” he remarked.

He also criticized the lack of clarity in the government’s communication on the matter.

“The problem is the communication around it; the government and the state agencies being forthright to us about what exactly they want to raise the money for, what the percentages are and how they are going to use the money for whatever investment they want to do.”

Mr Acheampong further noted that his estimates point to the royalty rights being valued between $1.6 billion and $3 billion “based on forecasts of production and gold price assumptions.”

The government has however valued the rights at $1 billion based on balance sheets.

The government through the Minerals Income Investment Fund (MIIF) set up Agyapa Royalties Limited to monetise Ghana's gold royalties.

In exchange, the company plans to raise between $500 million and $750 million for the Government on the Ghana and London Stock exchanges to invest in developmental projects.


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