Parliament has approved the controversial Agyapa Mineral Royalty Limited agreement with the government of Ghana despite a walkout by the Minority.
Two years ago, parliament passed the Minerals Income Investment Fund Act 2018.
The act establishes the Minerals Income Investment Fund to manage the equity interests of Ghana in mining companies, and receive royalties on behalf of government.
The fund is supposed to manage and invest these royalties and revenue from equities for higher returns for the benefit of the country. The law allows the fund to establish Special Purpose Vehicles (SPVs) to use for the appropriate investments. Last month, government introduced an amendment to the act to ensure that the SPVs have unfettered independence.
In pursuit of the provisions in the original act and the amendment, the Minerals Income Investment Fund has set up an offshore limited liability company known as Agyapa Royalties Limited (which was previously known as Asaase Royalties Limited). The firm has been incorporated in Bailieick of Jersey – UK, a tax haven.
Agyapa Royalties Limited has been registered in Ghana as an external company. Now, it has established a Ghanaian subsidiary known as ARG Royalties Ghana Limited. The Fund is the sole shareholder of Agyapa for now.
Government has laid before parliament for approval a Minerals Royalties Investment Agreement among the government of Ghana (represented by the Ministry of Finance), the Minerals Income Investment Fund, Agyapa Royalties Limited and ARG Royalties Ghana Limited to monetise royalties from gold.
Agyapa Royalties Limited (ARL) will trade shares on the Ghana Stock Exchange and the London Stock Exchange for private people to buy.
But the Mineral Income Investment Fund will remain the majority shareholder. ARL will raise between $500 million and $750 for government to use for developmental initiatives, and then future resources from gold royalties will go to ARL shareholders instead of the Mineral Investment Fund and for that matter government. Essentially, government is mortgaging expected royalties from gold in exchange for about $500 million – $750 million from ARL.
The main concern being raised is that creating the SVP as an offshore company in a tax haven will make it difficult to oversight the firm. It will make it difficult to properly identify who future shareholders of Asaase Royalties will be when the shares get floated.
The minority claims the agreement makes it impossible for a future government to replace managers of Asaase Royalties Limited although the Minerals Income Investment Fund will remain the majority shareholder.
The Minority is also insisting the agreement is based on the amendment done to the Minerals Income Investment Fund Act a few weeks ago which though approved by parliament, has not been signed into law yet by the president. This they say is illegal.
The Minority also believes its a bad idea to mortgage future revenues from gold royalties for a lump sum money today.
Former Deputy Attorney General Dr. Domnic Ayine and former Deputy Energy Minister John Jinapor led the minority’s opposition but the majority side stood their grounds.
Led by Deputy Minority Leader James Avedzi, the minority staged a walk out but the agreement was approved by the majority side of the house.