Dr Yakubu Abdul-Salam: The Agyapa Royalties Transaction – Challenging government’s valuation

The nation has been gripped in recent weeks by the controversy surrounding the Agyapa Royalties transaction, which seeks to encumber the bulk of Ghana’s future gold royalties to a special purpose vehicle (SPV) companyin Jersey in the Channel Islands, in what some lawyers have argued is for an indeterminate term.

A raging debate regarding several aspects of the transaction has ensued in the country, including;

• alleged breaches of corporate governance best practices
• alleged conflict of interest in relation to an appointment to a senior management role of the SPV and the award of contract to a legal advisory firm
• alleged lack of transparency with parliament which hinders the oversight role of the people’s representatives
• alleged lack of public consultation and engagement with civil society organisations
• the potential financial impact of the transaction on future governmentbudgets
• the balance of the transaction risk versus anticipated/perceived rewards, which I wrote about last week
• inter-generational equity allocation issues
• ideological differences regarding the structures needed for prudent management of the country’s mineral royalties, etc.

Perhaps however, the issue that has stoked the most attention and controversy, and in some cases outrage, is the Government of Ghana’s (GOG) overall valuation of the Agyapa Royalties transaction at $ 1 billion, ahead of the intended listing of the Jersey SPV on the London Stock Exchange (LSE).

Two articles challenging this valuation of the transaction have since been published and have garnered much attention.  These are the articles by Fui Tsikata/Kofi Ansah and Bright Simons of IMANI Africa.

Both articles show that GOG’s valuation represents a considerable under-valuation of the transaction.

Consequently, Ghana would be at a significant disadvantage if the transaction proceeds in its current form.

Read full statement below: