Agyapa deal: Ghana could be short-changed – Lord Mensah

A Senior Lecturer at the University of Ghana Business School, Dr Lord Mensah, has noted that although the Ayapa Royalties deal is an innovative way of raising revenue, Ghana could be short-changed following the valuation price.

He told Abena Tabi on The Key Points on TV3 Saturday, September 5 that Ghana will have to be cautious in order not to lose revenue from the deal.

The Agyapa deal has been valued at $1 billion.

According to government communications, the valuation was only to ‘spice’ up the deal to attract investors on the stock market.

But Dr Lord Mensah said “we should understand that be it gold, be it whatever, price appreciation is more difficult than price depreciation so we have to be careful how we place the value”.

“It is an innovative way to raise money. For the first time, we have seen an equity form of raising money but then, in the end we don’t have to shortchange ourselves as a country.”

For his part, Samuel Bekoe, an economist and a Member of the Civil Society Platform on Oil and Gas, raised similar concerns, saying the deal has been undervalued.

“From my experience, when you register a company that is the stated capital you use, which in our case will be the $1 billion, you have already named it and it is public and, therefore, that information has reached investors. Investors will even be willing to price that down giving you certain reasons.

“Given that government is going to own half of Agyapa, which of course is registered in a place that investors will love, in Jersey, it is still 51% and investors will put that political risk and control risk and even beat the price down," he noted.

Lord Mensah added that “I think it is grossly undervalued.”

Ghana’s legislature approved the controversial Agyapa Mineral Royalty Limited agreement Friday, August 14 despite a protest from the Minority.

Based on the agreement, 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 (MIIF) will remain the majority shareholder.

The Minority said the deal makes it impossible for a future government to replace managers of Agyapa Royalties Limited although the Minerals Income Investment Fund will remain the majority shareholder.

The flagbearer of the National Democratic Congress (NDC), John Dramani Mahama, has also questioned the deal and said he will not recognize it in case he wins this year’s polls.

A group of CSOs led by Dr. Steve Manteaw, Chairman of the Civil Society Platform on Oil and Gas, noted that the government of Ghana and Parliament rushed in approving the controversial Agyapa Royalties agreement.