Parliament last Friday approved five agreements to allow the country to derive maximum value from its mineral resources and monetise its mineral income accruing to the country in a sustainable and responsible manner, in line the Minerals Income Investment Fund (MIIF) Act, 2018 (Act 978).

The approval will enable the country to use a special purpose vehicle (SPV), Agyapa Royalties Limited, to secure about $1 billion to finance large infrastructural projects.

With that, Agyapa, which will operate as an independent private sector entity, will be able to raise funds from the capital market, both locally and internationally, as an alternative to the conventional debt capital market transactions.

The funds, which are expected to be raised from the Ghana Stock Exchange (GSE) and the London Stock Exchange (LSE), will be a long-term capital, without a corresponding increase in Ghana’s total debt stock and hence without a public debt repayment obligation.

Agreements

The approval covered the Minerals Royalties Agreement, the Amended and Restated Minerals Royalties Investment Agreement and the relationship agreement among the government, the MIIF, Agyapa Royalties Limited and ARG Royalties Ghana Limited in relation to the gold royalties monetisation transaction under Act 978.

The rest are the assignment agreement between the MIIF and Agyapa Royalties Limited for the assignment of the right of the fund to Agyapa to receive the royalty value due from ARG under the investment agreement for the acquisition of the allocated minerals royalties from the Fund in consideration for shares to be issued by Agyapa to the Fund at an agreed price of $1 billion.

In addition, the approval covered the indemnity agreement among the government, Merrill Lynch International, JP Morgan Securities plc., BMO Capital Markets Limited, Peel Hunt LLP and Tamesis Partners LLP under the Minerals Royalties Investment Agreement in respect of the proposed offering of shares in Agyapa Royalties by Agyapa and the MIIF to institutional investors outside Ghana and the admission of the shares to the standard listing segment of the Official List of the Financial Conduct Authority and to trading on the LSE in relation to gold royalties monetisation transaction under Act 978.

The agreements were presented to the House on August 13, 2020, and referred to the Finance Committee for consideration and report.

Minority objections

However, the approval was not without drama, as the Minority refused to be part of the debate prior to the approval and subsequently walked out of the Chamber.

Before the Minority members walked out, they had argued for an outright rejection of the agreements on the grounds that they were based on the amended MIIF Bill which was yet to be assented to by the President to give the fund power to incorporate Agyapa Royalties Limited as an offshore company for purposes of carrying out the business of the fund on sound corporate governance principles.

Giving legal grounds for the Minority’s objection, the Chairman of the Subsidiary Legislation Committee of Parliament, Dr Dominic Ayine, said in terms of the statutory basis of the agreements, they (agreements) were based on the MIIF Act which was passed by the House to give the fund the power to incorporate SPVs for purposes of carrying out business of the fund.

The Minority also posited that at the committee level the same day, the agreements’ transaction documents (prospectus) that spelt out the terms and conditions of the shares subscription were never made available since the Majority argued that the prospectus was “confidential”.

Further arguing its case, the Minority said no document could be confidential as far as Parliament was concerned, and that even at the committee level, there was no reason it could not have scrutinised the terms and conditions of the prospectus in order to approve the agreement, in accordance with Article 181 (5) of the Constitution, since it was an international transaction.

Led by the Deputy Minority Leader, Mr James Klutse Avedzi, the Minority walked out of the Chamber and the agreements were approved.

Mortgaging mineral revenue

The MP for Yapei Kusawgu, Mr John Jinapor, said curiously the SPV had started with the name Asaase Royalties Limited, but in just four days the name metamorphosed into Agyapa Royalties Limited on grounds that many other companies bore the Asaase name.

He wondered why Parliament, on the last sitting day, would have to peruse, consider and approve five agreements.

Making reference to Appendix 4(b) of the Mid-year Budget in relation to mineral royalties, he said Ghana was getting almost $200 million every year from its gold revenue and, therefore, questioned the insistence and rush by the government to seek $500 million.

Unpatriotic act

Reacting, the Minister of Information and MP for Ofoase Ayirebi, Mr Kojo Oppong Nkrumah, described the threat against foreign investors buying the shares of Agyapa Royalties as unpatriotic, since it had dire implications for Ghana.

“While the sovereign government of the Republic, as it has done in years gone by, seeks to raise money to invest in improving the quality of life of the people, some choose to threaten international investors and undermine the efforts of the country,” he said.