The Opposition National Democratic Congress (NDC) has alleged that the Agyapa Mineral Royalties Agreement between government of Ghana and Agyapa Royalties Limited has grossly been undervalued.
According to the NDC, their calculation of the deal in its current form is worth US$1.7 billion which is more than the current valuation of the deal at US$1 billion.
Defending its allegation, the NDC stated that the government had pegged the total royalties from the concession at US$150 per annum of which 75.6 percent is assigned to the Agyapa Royalties Limited which in their calculation sums up to US$113 million per annum.
The party added that calculating the US$113 million per annum at a discounted rate of 3 percent for a period of 15 years, though the deal is to run into perpetuity, will sum up to nearly US$1.7 billion hence the current value of US$1 billion is an undervaluation of the mineral royalties.
At the party’s weekly press briefing, Haruna Iddrisu who is the leader of the minority members of parliament questioned the reason for the alleged undervaluation of the mineral royalties deal suggesting transactional cost or other hidden cost as causes of the undervaluation.
In the assertion of the minority leader, the deal is inimical to the interest of the state and skewed to give investors unreasonable returns as result it is likely to be oversubscribed.
He also reiterated that the deal would not be honored by a future NDC government.
“According to the government, the total royalties from the concessions is about US$150m per annum (very conservative figure). Agyapa is assigned 75.6% of this amount. That’s over US$113m per annum. If a DR (Discount Rate) of 3% is used, the PV (Present Value) is over US$3.7b. Even if the transaction has the purported tenor of 15 years, the PV of the cash flow is nearly US$1.7b. So where is the government getting the US$1b valuation of Agyapa from? Is the difference the result of transactional and/or other hidden costs?” Haruna Iddrisu squeezed.
The Agyapa Mineral Royalties Agreement has been a subject of controversies since the majority side of parliament approved the deal amidst protest from the minority side of the house.
Flagbearer of the main opposition party, John Dramani Mahama has vowed not to respect the deal should he win the December elections accusing the government of not being transparent with details of the deal.
Over fifteen Civil Society Organizations (CSOs) including Imani Africa has questioned the benefits of the deal to the country and demanded for it to be suspended for broader consultation citing lack of transparency as one of their concerns.
However, the government dismissed the concerns raised and insists that the deal would inure to the benefit of the country.
The agreement between government of Ghana and Agyapa Royalties Limited which acts as a Special Purpose Vehicle is to enable Ghana secure US$ 1 billion to finance large infrastructural projects.
The Agyapa Royalties Limited is expected to raise the money for Ghana from international and local stock markets.
