Investment analyst, Dr Theophilus Acheampong, has joined the many voices calling on the government to suspend the Agyapa Royalties agreement to allow for broader consultation.
In a seven-page analysis of the controversial deal, the energy economist and political risk analyst said that to enable for proper scrutiny of the deal and considering that the December 7 elections are just a few months away, there is the need to delay the agreement.
“This considers the fact that Parliament has passed the amended agreement as of 14 August 2020, and the conditions precedent for listing the securities of the London Stock Exchange need to happen on or before 31 December 2020. The stock exchange will always be there, and gold prices aren’t coming down considerably anytime soon, at least not in the next few months given the COVID-19 pandemic where it has become a store of intrinsic value,” he writes.
Government insists on going ahead with the deal that is expected to leverage Ghana’s mineral royalties for primary capital on the international market.
Under the agreement, government intends to monetise parts of its annual gold royalties from some mining concessions to raise $500 million of equity upfront from private investors through the placement of shares in a newly created Special Purpose Vehicle (SPV) which the State will transfer its royalties into.
Critics of the deal, including at least 15 Civil Society Organisations (CSOs), have said the deal lacks transparency.
However, suggesting ways government could better go about the deal, Dr Acheampong, said an option would be for the government to sell the rights to the royalties to a minerals income fund for an initial five-year period in return for an upfront $500 million cash payment being considered.
“The monies will be serviced with royalty payments placed in an Escrow account; this ensures that we will meet repayment schedules. This is cleaner, less complex and easier to manage without encumbering future governments.
“The current proposed approach creates additional complexity and more players in the food chain by way of lawyers, asset managers and accountants, many of whom must be paid annual retainer fees running into millions of dollars. That’s an implied interest rate or cost of borrowing,” Dr Acheampong recommends.