Business News of 2014-07-18

Parliament ratifies agreement among gov’t, two others

Parliament on Wednesday ratified a commercial agreement among the government, Lonrho Ports Ghana Ltd and Atuabo Freeport Ghana Ltd in respect of the Ghana Oil and Gas Freeport Project.

The agreement is to facilitate the development and operation of a joint venture with the private sector and for the government to build an oil and gas free port at Atuabo in the Western Region to meet the logistical needs and support other requirements of Ghana's oil and gas industry and those of the wider Gulf of Guinea.

Once again, the Minority opposed the deal and refused to vote in favour of it. For the past four days, the two sides in the House have disagreed on almost every issue and debates have been marked by needless posturing, bellicose rhetoric and the flexing of partisan political muscles.

Terms and conditions of agreement

Under the agreement, 45 per cent of the venture is to be wholly Ghanaian-owned. This will include 35 per cent of the initial capital contributions being made by Ghanaian institutions such as SSNIT, the Ghana Ports and Harbours Authority (GPHA), the Ghana National Petroleum Corporation, the Volta River Authority (VRA) and the State Insurance Company (SIC) to acquire equity in Atuabo Freeport Ltd.

According to the agreement, the Government of Ghana "shall be given a 10 per cent stake of the initial share capital of the developer at a per-value- zero premium. Further, all initial capital contributions up to commercial operation date in respect of the initial Government of Ghana (GoG) shareholding shall be carried by the other shareholders on a non-refundable basis ensuring non-dilution of the government's interest. "

The remaining 55 per cent of the equity would be held by international investors and would include Lonrho Ltd, Africa Finance Corporation and China Harbour Engineering Company. The chairman of the board of the Atuabo Free Port Ltd shall be nominated and appointed by the government.

Minority's protestations

The views of the Minority were articulated mainly by the member for Takoradi, Kwabena Okyere Darko-Mensah, Mr Alex Afenyo-Markin (NPP Effutu) and Papa Owusu Ankomah (NPP Sekondi). They said a clause in the agreement restricted the expansion of the Takoradi Port because the signatories had agreed that if the port expanded, the Atuabo Port would not be viable.

They contended that the move was an unfair practice and the Atuabo Port Project was being used to stifle the development of the Takoradi Port. According to them, the Ghana Ports and Harbours Authority (GPHA) had secured some loans to develop the Takoradi Port and needed to pay back those loans.

Therefore, stifling it will prevent it from meeting its financial obligations. They also contended that it was unfair to demand taxes from the GPHA in respect of the Takoradi Port and yet exempt the Atuabo Port from taxes.

Mr Afenyo-Markin made available to the First Deputy Speaker, Mr Ebo Barton-Odro, who presided over the debate, a letter purpotedly written by officials of Lonrho to the Minister of Finance and Economic Planning requesting him (minister), among other things, to bring pressure to bear on Parliament to approve the deal with dispatch. He said the company’s move was extremely disrespectful of Parliament.

Papa Ankomah wondered why the GPHA could not be made to develop the new port. "Do we need a new port? If yes, why can't the GPHA develop it? If they can't, what strategy is needed to develop it? The Executive has not been able to answer those questions. It is because the processes leading to the agreement are not the best," she said.

Majority's views

The Minister of Energy and Petroleum, Mr Emmanuel Armah-Kofi Buah, said the GPHA had been in existence for decades and should have taken the initiative to build a port dedicated exclusively to the country's oil and gas sector. Instead, he said, GPHA officials had argued that the Takoradi Port had enough facilities and that it was big enough to handle the oil sector; an argument which events had proven wrong.

The project, he said, would create jobs for 5,000 youth, and urged all members to support the deal. Alhaji Ahmadu Sorogho said the benefits of the deal far-outweighed the "defects" articulated by the Minority.

The Chairman of the Finance Committee, Mr James Klutse Avedzi, said the statement to the effect that the Takoradi Port could not be expanded was false, and indicated that the GPHA was currently constructing one berth dedicated exclusively to the oil and gas sector. The agreement, he added, gave GPHA the right to construct another berth. After the extensive debate, the Majority voted in favour, while the Minority abstained.