Parliament on Friday ratified the sale and purchase agreement of 70 per cent of issued and fully paid up shares of the Volta Aluminium Company Limited (VALCO), without any objection from the Minority
side which last week raised concerns about the deal.
Under the Agreement, Government of Ghana is to sell its 70 per cent holdings of issued and fully paid shares of VALCO to International Aluminium Partners for US$175 million as first step towards the development of an integrated aluminium industry envisaged by the first President of Ghana 47
years ago.
The whole integrated process is estimated at US4.7 billion.
The paper on the Agreement was laid before the House last week Wednesday, October 29, 2008, and subsequently referred to the Joint Committee on Finance, Trade, Industry and Tourism, for consideration and report.
The largest Minority National Democratic Congress (NDC) two days later called for a suspension of the Agreement to allow for a proper determination of the financial worth of the company by an independent valuer.
Signed by Mr. Haruna Iddrisu, Minority Spokesperson on Communications, the release expressed the concern of the Minority about the clarity and effect of certain provisions of the agreement, which the Minority viewed as inimical to the economic interest of the country and sustenance of the Volta River Authority (VRA) and the future of the aluminium industry in Ghana.
The release referred to Memorandum to Parliament on the Agreement, which obliged the VALCO to enter into a binding and irrevocable Power Purchase Agreement/Electricity Supply Agreement with the VRA, which should also deliver a certain quantum of power based on certain thresholds in term of tonnes of aluminium for a period of four years.
The Memorandum, the release said also referred to the terms of agreement for a consortium to make an initial payment of US$25 million within 15 working days from the execution of agreement and upon approval of the agreement by Parliament.
The outstanding amount of US$150.5 million is to be paid within 45 working days after the VALCO smelter has commenced production with two pot lines in normal operation, the execution of the transfer of shares by the Government, shareholders agreement between the shareholders of the company and the delivery of the share certificate signed by VALCO in favour of the consortium.
The Minority said it viewed the building of consensus on "this major economic decision as imperative and the way forward for national cohesion and peaceful development of the country.
"The indecent haste with which the government wants to push away this very important transaction at the last days of this Parliament and the Administration is mind-bugling," the release added.
The Joint Committee Report on the Agreement however made a case for the sale.
It observed that Kaiser, with which the then Government entered into agreement for the construction of the Akosombo Dam, and the building of the aluminium smelter called VALCO, did not explore the option of mining and refining the local bauxite deposit as envisaged but rather opted for imported alumina for processing.
The Committee Report stated that after 42 years of doing business in Ghana, Kaiser sold its 90 per cent share in VALCO to the Government of Ghana in July 2004 for an amount of US$18 million, with Aluminium Corporation of America (ALCOA) also later offloading its 10 share to the Government of Ghana, thereby making Government a 100 per cent owner of the aluminium shelter.
According to the Report, in May 2008, a consortium of International Aluminium Companies, comprising Brazilian Mining giant CVRD (VALE), which also happens to the second largest mining company in the world, and the largest producer of iron ore with an asset base of $165 million and Norsk Hydro Aluminium Company of Norway, offered to purchase 70 per cent of the issued and fully paid shares of VALCO for US$ 175 million as first step of partnering the Government of Ghana in developing an integrated aluminium industry in Ghana over a period of approximately six years.
On the initial payment of an amount of US$25 million, within 15 working days upon the execution of the agreement by Parliament, the Committee said the amount "serves as an irrevocable commitment on the part of the consortium to pay the amount provided that certain conditions pertaining to the Agreement are met."
On the issue of power supply, the Committee Report said the Minister of Energy assured the Committee that the power needs of the country is currently at 1200 megawatts but about 1900 of power was generated presently.
Also with the construction of the Bui Dam and other hydro power project, the country is expected to generate more than enough power to attract and support such strategic industries.
Concerning the valuation of the Company, the Report said the Minister of Trade assured the Committee that valuation was done in 2004 prior to government's acquisition of VALCO, and have since then been no additions to the company to warrant another valuation.
The Report further said valuation was carried on by ALCOA in July 2008 for the sale of its 10 per cent shares to Government of Ghana, and based on that valuation, the 10 per cent shares were sold to Government of Ghana at US$2 million, but Government has however managed to negotiate 70 per cent of its shares in August 2008 for US$175.5 million.
On the complaint by the Minority NDC that the agreement was being rushed through Parliament in its last few days to recess, the Committee said the negotiations started six months ago, and the Agreement was concluded in last August when Parliament was on recess.
"There is the need to expedite the approval process since the price of aluminium and other metals is on the decrease on the world market, which has affected the future earnings of investment and its value
"It is of great importance to meet the condition of Parliamentary approval to secure the irrevocable commitment on the part of the consortium", the Report said.
The benefits of the Agreement, the Report noted, were that the company
had a programme of recalling some of the retrenched workers noting that Kaiser settled all outstanding entitlements due the redundant VALCO workers from proceeds of the deal with the Government of Ghana.
Other benefits the Report noted would be the establishment of an integrated aluminium industry, employment opportunities, refurbishment of Tema-Kumasi Rail Line and the revamping of the local salt industry.
Later in an interview, Mr. Enoch Teye Mensah (NDC-Ningo Prampram), who is also a Member of the Committee on Trade and Industry, who supported motion on the Agreement, when it was moved on the floor of the House, said all the concerns raised had been addressed.
In an apparent reference to the Agreement, Mr Mensah said "theory is to guide action," and not cast in gold.
However, Mr Joseph Yieleh Chireh (NDC-Wa West) said the NDC stood by its position on the concerns raised in its statement last week.
Meanwhile, the Speaker, Mr Ebenezer Hughes has advised Mr Alfred Kwame Agbesi (NDC-Ashaiman) to file a question on his request to know the cost of the new Presidential Complex, for which he (Mr Agbesi) said invitation had gone round for commissioning next Monday.