Category: News

The Chamber of pharmacy Ghana, (COPG), in collaboration with some others key industry partners, has launched the 2020 Ghana Pharmaceutical Expo (GHAPHEX 2020) last week in Accra.

The event slated for 17th to 19th June 2020 under the theme: “Making Ghana a Pharmaceutical Hub-Opportunities and Partnerships) is being organized by the COPG in collaboration with Ministry of Trade and Industries, the Exim bank Ghana, Food and Drugs Authority of Ghana, Ghana Standards Authority, Noguchi Memorial Research Institutes and African Vaccines Manufacturing Institute(AVMI).

GHAPHEX 2020 is expected to serve as a congenial environment to accommodate important players of the Ghana pharma industry together with other very interesting international pharmaceutical businesses and stakeholders.

It also expected to host about 100 local exhibitors and a good number of business participants from all over the world.

It will promote business discussion among participants and workshops on medical, pharmaceutical, science, engineering, technology and business by practically connecting Government agencies to pharma manufacturing companies.

Speaking on the theme, the deputy minister of health, Hon. Alex Kodwo Kom Abban said the government of Ghana is taking steps to make Ghana a sub-regional pharmaceutical hub. Urging all key players in the pharmaceutical sector, including the private sector, to pool resources together to turn Ghana into a vibrant pharmaceutical research and development and production hub – not only to support healthcare delivery but also to provide jobs associated benefits to millions in Ghana.

“For Ghana to become a world-class pharmaceutical investment and manufacturing hub for the continent, producing and supplying high quality and affordable medicines requires for the need to develop and transform the pharmaceutical sector to be competitive and sustainable, locally manufacturing and distributing quality, safe and efficacious medicines for domestic and export market”, he said.

In his welcome address, the Chairman of the Chamber of Pharmacy Ghana Mr. Harrison K. Abutiate commended the Government of Ghana for choosing the pharmaceutical sector among the three main anchor areas of industrialization in Ghana.

To him, as a result of this initiative, the Chamber in partnership with HLM Holdings has earmarked part of the DAWA Industrial Zone as a Pharmaceutical enclave. The enclave will also see the establishment of Active Pharmaceutical Ingredients (APIs), Bioequivalence Centre (BE)

He also commended the Minister of Trade and Industry for the establishment of a Pharmaceutical Unit that is currently assisting in the provision of Technical support to the sector.

Mr. Abutiate thanked the Department for International Development (DfID) UKAid for supporting the Chamber with a Pharmaceutical Technical Expert inReviewing the Draft Pharmaceutical Sector Development Strategy, Supporting in the establishment of the pharmaceutical enclave, Positioning Ghana as a Pharmaceutical Manufacturing Hub and Strengthening medicines regulation and strategic use of Intellectual Property (IP) laws and Establishing an Incubation Platform under the Chamber.

He stressed that the Incubation platform will provide specific support services to the industry such as; Provision of training and capacity building Business to Business Linkages Industry Information repository and

Organising regular networking sessions among members, topical presentations and inviting guest speakers.

Mr. Harrison K. Abutiate called on both local and international companies to participate in GHAPHEX 2020 by exhibiting, sponsoring and participating in all activities to make it a memorable one.

Adnan Adams Mohammed

Absa Group, the parent company of Absa Bank Ghana, has recorded a 1 percent increase in its dividends to R11.25 per share after achieving 6 percent revenue growth for the 2019 financial year, with the headline earnings growing slightly.

The Bank’s revenue growth shows an improved trend, with strong deposit growth of 12% and customer loan growth of 9%,” said Absa Group Financial Director Jason Quinn.

Headline earnings of the Group rose by 1% as loan impairments increased. Its balance sheet, revenue and earnings growth were in line with peers after lagging for a number of years.

The Absa Regional Operations (ARO) business, comprising Absa Group’s African operations excluding South Africa, delivered strong financial performance in 2019 with earnings growth of 16% (12% in constant currency), enhancing the overall Group’s position.

“We are pleased with the results of our Absa Regional Operations and their contribution to Absa Group’s overall performance, having maintained double-digit growth and growing our headline earnings. We look forward to continuing to grow our revenue market share on the continent over the coming years,” said Peter Matlare, Chief Executive Absa Regional Operations during the launch of its report last week.

Daniel Mminele, Absa Group Chief Executive Officer in his remarks at the launch said, “We delivered a resilient performance against a challenging macroeconomic backdrop. We maintained balance sheet momentum and growth was broad-based across most businesses”. 

The rebranded bank from Barclays to Absa is optimistic about the future and the opportunities across its African markets. Its objective is to develop strong, digital-first financial systems in a sustainable manner and to contribute positively to the development of our communities in which we operate.

The publication of Absa Group’s results comes just barely after the completion of Absa Bank Ghana brand transition. The bank has begun a new journey which is one of striving to be customer-obsessed, acknowledging the strength of its people and delivering results sustainably.

Absa Group launched its growth strategy in March 2018 after Barclays PLC ceased to be the controlling shareholder in the Pan African banking group. Absa Group is on track to complete its separation programme, one of the largest in the banking sector in terms of size and complexity, on time and within budget by the middle of 2020.

The Group’s core businesses highlights were given as follows. The Retail and Business Banking South Africa continued to show signs of a turnaround as the unit gained ground in key areas, recording increases in customer loans and deposits. Revenue momentum increased and costs were well contained. However, an increase in impairments impacted on earnings. Gross loans and advances grew by 7% to R530bn; Deposits grew by 10% to R373bn; Non-interest income grew by 6%; Cost-to-income ratio improved to 57.7% from 58.4% in 2018.

Also, Customer growth of 1% to 9.7m; Market share growth in retail deposits and retail loans and advances, including personal loans, new home loans and vehicle finance.

Corporate and Investment Banking earnings growth was driven by strong performances in countries outside South Africa, which partially offset a decline in earnings in South Africa.

Highlights include: Continued growth momentum in ARO with total income growing 15% (12% in constant currency) to R7.4bn; Solid income growth from Corporate Bank franchise up 9% (8% in constant currency) to R10.6bn; and Strong growth momentum in the trade finance business in SA, with a CAGR of 19% in the last four years.

Additionally, Absa Regional Operations (ARO) performance highlights included: Revenue grew by 14% (11% in constant currency); Pre-provision profits increased by 17% (14% in constant currency); Cost-to-income ratio improved to 57.8%; while separating, ARO has grown its retail primary customer base in 2019 to 1.5 million customers

The Group indicated that, South Africa’s macro environment has consistently disappointed for the past five years, concluding that, the outlook remains muted, compounded by the recent outbreak of coronavirus which will have an impact on the global macro outlook, and which will also have implications for the economic prospects in our other operating regions.

“We will continue to drive the execution of our strategic objectives with agility, and take advantage of emerging opportunities, while managing risks more effectively in response to changes in the operating environment” said Mminele.

Adnan Adams Mohammed

A Financial and Energy expert, Alex Mould has exposed the NPP led government over a ‘betrayal of patriotism’ to Ghana to favour a foreign entity for their ‘political and personal interests’ in the renegotiated Aker Energy deal.

The former Boss of the Ghana National Petroleum Corporation (GNPC), who had earlier on exposed the government on how bad the Aker deal was and responded to by the Ministry of Energy (MoE) to justify why it gave negotiated such a bad deal for Ghana, noted the response from Ministry of Energy (MoE) clearly indicates their little or lack of knowledge in the management of the petroleum industry. “The Aker amendments are simply a multibillion-dollar betrayal of the national interest.  No amount of spinning or personal attacks can mask that fact.  The more MoE or other players try to defend it the deeper the hole they dig for themselves”, he said.

The government of Ghana signed a deal with Aker Energy, which bought the South Deepwater Tano (“SDWT”) and Deep Water Tano-Offshore Cape Three Points (DWT-OCP) from Hess Oil and AGM Petroleum, under an already negotiated Petroleum Agreements by the Ministry of Energy on behalf of the country. Aker Energy then requested to amend the previous Agreements to reflect current situation and interests. Aker Energy tendered their proposals to Parliament through the Ministry of Energy but was thrown out by Parliament after Civil Society rose against the proposals.  Aker Energy and the MoE had to sit together to amend the proposals and re-lay to Parliament. It was the amended Agreement that, Mr Mould still found serious issues with aimed at short-changing Ghana to favor Aker Energy.  

“Government has no business playing ‘Father Christmas’ with our oil resources”, the former Executive Director of Standard Chartered Bank stated in a press statement he issued on Saturday. Adding that, “It is truly sad to think that the Energy Ministry and for that matter, President Akufo-Addo’s government genuinely has so little understanding of this industry.”

In the detailed press statement, Mr Mould made serious revelations that must be of grave concerned to every patriotic citizen of the country.  

I have read a response to my remarks about the Amendments recently made to Aker’s South Deepwater Tano (“SDWT”) and Deep Water Tano-Offshore Cape Three Points (DWT-OCP) Petroleum Agreements by the Ministry of Energy (“MoE”). The statement is issued in name of the MoE but represents the agenda not of our hard-working, professional civil servants but of the political appointees superintending them.  It is these politicians that must, and one day will bear full responsibility for the Aker debacle and the many other scandals that have plagued the energy sector in the last few years.  So even though my comments are formally directed to MoE they are intended really for the political leadership – the ruling NPP.

MoE’s response seeks to do two things.

a.            Clumsily deflect attention away from a discussion of the Aker Amendments scandal with false and pitiful allegations about my supposed role, as GNPC CEO, in over-pricing Sankofa gas; and

b.            Confuse the public about the substance and impact of the Aker Amendments and deceive the public into believing somehow that the Aker Amendments are good for Ghana. 

I respond as follows:  

Sankofa Gas Pricing

First, let me address the fetish that NPP spokespersons are making out of “take-or-pay” contracts. There is simply no way international oil companies or the banks that finance them (or indeed any prudent investor) will proceed with a multibillion-dollar investment without near-certainty about future revenue inflows. Take-or-pay is simply to ensure that financiers are paid whether product is sold or not.

Were there take or pay provisions in the Sankofa gas development agreements?  Of course, there were.  Ghana has a small, underdeveloped gas market and increasingly weak gas sector policymaking.  The direct off-takers of gas (GNPC and Ghana Gas) are owned by the State and notoriously subject to “non-commercial” Government interference.  The ultimate off-takers of gas (the power generating companies) are all very weak financially (and in some cases operationally).  No one will build a 7 billion-dollar gas production system to serve this market without assurance that once the infrastructure is delivered the costs of building and maintaining the plant will be repaid – even if the Offtaker for whatever reason does not purchase the gas.

Second, let me clarify the position on gas-pricing. A focused team of highly experienced and capable professionals within the energy and finance sector (and not just Alex Mould), participated in the thorough negotiations to achieve the US$9.8/MMBtu ceiling price; to ensure a reasonable market Rate of Return (RoR) to the Contractor based on its estimates of development cost, pay-out time, and (multiple) risks of a significant deep-water development in a small and unproven market.  GNPC was confident that it could lower development costs in several ways including by funding various work packages directly (GNPC has a lower cost of capital than Eni/Vitol) and rigorous project oversight through the Joint Management Committee to ensure efficient and timely execution.  The Agreement therefore specifically provides that all savings from Eni/Vitol’s original cost projections would be used to reduce the gas price.  Specifically, every 100 million dollars of project cost saved would translate to a $0.55/MMBtu savings in gas price. We succeeded in lowering the Sankofa development costs by approximately 691 million US Dollars.  This entitled Ghana to a gas-price reduction of approximately US$3.8/MMBtu.  This means a new pric

e (and a new price floor) of less than $6/MMBtu.  In other words, the cost of gas to thermal power generators should have dropped by about 40% relieving the deep distress of the power sector!  This price saving could have been passed on to citizens in lower electricity tariffs or by investment in new power generation capacity.

Unfortunately, this 40% reduction in the Sankofa gas price through the prudent commercial structuring achieved by the GNPC team has NOT materialised.  Why is this the case?

The primary reason for this is that the Ministry under its current leadership has simply dropped the ball!   MoE has simply allowed Eni/Vitol to increase its development costs and spend the 691 million US Dollars saved, on new wells and other expenses that were not approved in the initial development plan.  The NPP government has whittled away the savings made from $3.8/MMBtu to only $0.4/MMBtu!  Of course, what should have happened was that the US$691million savings should first have been applied to reduce the gas price before allowing an increase in development cost.

Why would the Energy Ministry behave in this way?  The corollary of take-or-pay conditions is that if the Contractor miscalculates the cost of development or mismanages the execution of the development project those additional costs are for the Contractors account and not for the account of the people of Ghana. Before these additional costs can be recognised the Contractor must prove that they could not have been avoided.

The NPP government has no business playing Father Christmas to Contractors with our resources.  It is precisely this tendency that has led to the Aker travesty.  WHETHER THIS IS DUE TO ARROGANT IGNORANCE AND INCOMPETENCE, AN INFERIORITY COMPLEX IN THE FACE OF EUROPEANS, OR RECKLESS CORRUPTION REMAINS TO BE SEEN.

The second reason is of course that Government has failed without any reasonable justification to complete the pipelines required for evacuating Sankofa gas so it can reach the power industry.

Rationalising the Aker Amendments

The NPP government wants Ghanaians to believe that the transfer of billions and billions of dollars of national assets to Aker is good for us.  Ministry of Energy’s statement offers several spurious arguments to back up this proposition.

First MoE claims that:

“The amendments to the Petroleum Agreements of Aker were to provide regulatory certainty and incentives to support the realisation of Aker’s Pecan Project and increase investment in the AGM Block respectively (my emphasis).”

Let us examine this statement. 

Regulatory Certainty.

As regards to providing “regulatory certainty” I note first that a government does not achieve “regulatory certainty” by amending a single petroleum agreement.  It does so by amending the Regulations that have industry-wide application. THIS WAS PURE FAVOURITISM. However, it will lead to a stampede of IOCs looking for similar treatment (and perhaps that is what MoE wants).

Second, there was never any regulatory uncertainty regarding the Pecan development.  Ghana’s approach to managing PA Contract Areas has not changed since 1984 and is indeed pretty standard throughout the international industry. GoG makes a large area available for exploration to a Contractor over a (typically) seven-year period broken into 3 sub-periods. To ensure that the Contractor deploys the resources that enable it to explore diligently and optimise the chance of discoveries the Contractor is required at agreed points to relinquish the parts of the Contract Area that it is not willing to commit resources on. It can then  concentrate on the areas it thinks are most attractive.  At the end of the 7 years, the Contractor is allowed to retain only the areas covering the geological structures in which they have made discoveries that they consider worth developing.  

Areas relinquished by Contractors go back into the “pot” to enable Government to market it to other oil companies.  This ensures the most thorough exploration of our potential.  Let us be clear:

●             Aker was aware of these rules before it decided to acquire the Hess stake in the DWT-OCP block.

●             Aker knew what stage of the Exploration Period Hess had reached.  Aker knew Hess had made specific discoveries and appraised those it thought worth appraising.  Aker knew Hess had begun preparation of development plans for the fields it considered worth developing. 

●             Aker knew full well that the period for exploration of new prospects had ended. 

●             Aker knew full well that to access additional acreage within the original contract area it would have to either participate in a bid round for those areas or at best seek a bilateral negotiation with MoE for them (possibly on different economic terms from the original Hess PA).

The rules were clear; the problem was simply that Aker sought special extra-legal treatment and MoE was willing to bend over backwards to please Aker.

Incentives for Aker.

When it talks about “incentives to support the realisation of Aker’s Pecan Project” Government is either unforgivably naïve or disgracefully dishonest (or both).  

There is little chance that Aker would walk away from the DWT-OCP Block because the government refused to give it extraordinary exploration rights.  If Aker did walk away it would simply lose its rights and would not be entitled to compensation.  If Aker did walk away, Ghana’s industry would suffer minimal, if any, damage.  Aker is not an Exxon or a Shell or a Total.  It does not have any special oilfield development abilities that Ghana cannot do without. With proven resources and a development plan in place, Ghana could easily find another Contractor to come in and work with GNPC and Explorco on terms much more favourable to Ghana than those provided for in the original DWT-OCP Agreement. Any moderately seasoned negotiator would have
called Aker’s bluff immediately.  Indeed, Minister Boakye Agyarko did precisely that (before he was removed from office).

The claim that the Amendments were intended to achieve an.. “.. increase [in] investment in the AGM Block.” again is also false.  If the intention was to increase investment, then the SDWT Amendment agreement would capture Aker’s enhanced work and expenditure commitments. No such commitments are given in the Amendment Agreements. Some of us are reliably informed Aker have promised the NPP government $750m loan and only God knows what they have promised individuals within the corridors of power. They have also promised all sorts of other investments plus a $15bn spend in the two blocks based on additional wells and new technologies. Aker may have made theses promises to senior Government officials and “advisors” but none of these are captured in the Amendment Agreement which is glaringly one-sided.   

Positive Results.

Ministry of Energy then goes on to claim:

These incentives have already yielded positive results for the country as AGM recently announced crude oil discoveries following an accelerated drilling campaign.

MoE is claiming (with no shame) that amendments to a Petroleum Agreement ratified on 22 December 2019 led to an oil discovery 6 months earlier in June 2019?!  Even if MoE is referring to the Amendments it presented to Parliament in April last year the claim makes no sense.  At the time that Aker started drilling in June, Parliament had not ratified any amendments.  As I pointed out in my original article, Parliament made its ratification of the April 2019 Amendments conditional upon:

a.            Restoration of GNPC’s additional interest entitlement (which the Amendment proposed to drop from 15% to 3%) to at least 10%; and

b.            Resolution of the dispute between Med Songhai Developers Ltd (the original Ghanaian Project partner) over Aker’s attempts to push it out of the Project. 

Parliament gave the Minister for Energy 6 months to report back on the fulfilment of these conditions.  So as at June 2019, no amendments had been passed (and for the record, the Minister for Energy never reported back to Parliament as required).  In any case, anybody who knows anything about the O&G industry knows that drilling programmes are not put together in 30 days.  They are planned months and years ahead of execution.  Aker had committed to the May-June drilling campaign long before the Minister took his first round of amendments to Parliament.

I should also point out that the 2 wells Aker drilled in June were not in any way “accelerated”.  They were wells due in the Initial Exploration Period under the original PA.  And since MoE is promising an accelerated drilling campaign it should tell the public when the next well is expected. Can MoE deny that Aker’s current programme does not include any new drilling before the third quarter of 2021?  Is this the “acceleration”?

Local content

MoE writes:

“Mr Mould claims that local content will be collapsed with the PA Amendments.  What he fails to recognise is that it is the Minister who decides whether a PoD will be approved or not, and part of the PoD is the local content plan.  As a matter of fact, Aker has established a new Company, Aker Ghana Investment Corporation (AGIC) to develop Ghanaian Tier 2 and Tier 3 suppliers.  This is over and beyond the local content terms in the original Agreement”.

Let us examine this argument. 

Power to Approve Development Plans

First, does the Minister’s power of approval of a Development Plan protect national local content aspirations?  Let us look at what the Amendments say.

Clause 3.2 of the DWT-OCP Amendment Agreement amends Clause 8.16A of the PA to read:

Contractor shall have the right to amend, vary, or adjust the Development Plan within 12 months of the final investment decision by A contractor without the consent of the Minister, provided that such amendment, variation or adjustment shall not result in an increase in total capital expenditure in respect of the Pecan field.  Contractor shall promptly notify the Minister in writing of such amendment, variation or adjustment.

In other words, Aker can rewrite the Development Plan (including the local content provisions) without reference to the Minister.  It can (for example) reallocate costs and contracts away from local to Norwegian subcontractors as long as this does not increase overall costs.  How then can MoE’s power to approve Development Plans be said to protect local content? 

(Incidentally, this surrender of policymaking power by a minister is truly extraordinary.  I cannot imagine that Aker would enjoy such treatment in Norway. I cannot believe that Aker would dare to suggest to the Ministry of Petroleum and Energy (“MPE”) that it should be entitled to unilaterally override the terms of ministerial approval.  What then is the point of the Minister approving a development plan? How could any minister propose such self-emasculation to Parliament? How can we the people entrust the protection of our national commercial interests to a minister who is so subservient to private companies?)

To continue, let us look at Clause 5 of that Amendment Agreement which amends Section 20(3) – 20(7) of the DWT-OCP Petroleum Agreement.  I will reproduce it in full.  The Amendment specifically states that:

20.3        The procurement of goods works or services for petroleum operations shall be within the work programme and budgets approved by the JMC.  The selection of suppliers and the award of contracts by Contractor under an approved work programme and budget shall not be subject to approval by the JMC or governmental authority.

20.4        Contractor shall establish a transparent procurement process whereby the JMC, the Petroleum Commission and the Minister are informed about the selection of suppliers and award contractors.

20.5        Contractor shall be entitled to employ a split-contract model. Under the split-contract model

a.            if scope of work consists of goods, works or services originating Ghana as determine by Contractor (in-country scope) it will be awarded to a locally incorporated JV company licensed by the Petroleum Commission that has the technical capability to perform the scope of work; and

b.            if the scope of work consists of goods, works or services not originating in Ghana, as determined by Contractor, (out-of-country scope) it will be awarded to a foreign legal entity that has the technical capability to perform the scope of work.

The split-contract model shall apply to inter alia goods, works and services supplied for the FPSO, SPS, SURF, Drilling Rigs and Well Services.

20.6        Pursuant to Article 26.2 the obligation on a contractor or subcontractor to make contributions to the local content fund established under Act 919, does not apply to Contractor, its Subcontractors, and suppliers for goods, works or services, to be used solely and exclusively in the conduct of Petroleum Operations.

20.7        Subcontractors shall have the same rights as Contractor specified in Article 26.2 to select and award contracts and may use an out-of-country scope (with foreign legal entities) and shall keep the Petroleum Commission and the Minister informed about the selection of suppliers and award of contracts.

Could Aker’s control over procurement be any more unfettered?  Once a budget is approved, the decision as to who gets the contract is entirely within Aker’s discretion.  All they have to do is designate a particular service “out-of-country scope” and it is gone.  MoE can do nothing.  It is important to understand that on average field development costs in the wider Tano Basin (Jubilee, TEN, Gye Nyame-Sankofa) have been between 5 billion US Dollars and 7 billion US Dollars.  It is important also to understand that unlike Tullow, Kosmos, Eni, Hess etc Aker is principally a service company.  It has a fleet of subsidiaries that provide the services that most IOC’s have to contract out on an arms-length basis.  It is no surprise that Aker seeks unfettered control over the award of contracts.  The surprise is that the NPP Government is happy to go along with this approach.

Aker Ghana Investment Company

What of the “Aker Ghana Investment Corporation” and its development of “Tier 1 and Tier 2 suppliers”? My answer is that nobody will love Ghana more than her citizens.  MoE’s reliance on AGIC reflects either naivety or betrayal.  Where are Aker’s enhanced local content obligations?  Where is the contractual framework for monitoring performance or sanctioning non-performance? Where is all this spelt out?  When did “Tier 1 and Tier 2” typology become part of the language of our local content policy? There is nothing in the amended PA that addresses these issues.  Again, whereas Aker has tied Ghana up into knots to protect its interests our Government is happy to rely on unenforceable promises and goodwill?   

The point should be made (and this probably deserves an article on its own) that nothing in the non-binding sweet promises of Aker or its AGIC compares with the kind of indigenisation and local content boom that Ghana could have achieved through GNPC’s accelerated development strategy which had Explorco and the SDWT PA at its centre.  In Explorco, we had a national entity holding a 24% stake in the PA and a Contractor committed to ceding operatorship and thus control of procurement within 7 years.  Explorco necessarily would have invested in the growth of a fleet of Ghanaian service companies with which it would have begun to step out into the West African, continental and global market following a successful implementation of the SDWT project.  Now MoE has taken Explorco’s 24% interest away from it and handed this over to Aker in return for an additional 5% carried interest for GNPC.  IT IS TRULY SAD TO THINK THAT THE ENERGY MINISTRY AND FOR THAT MATTER PRESIDENT AKUFO-ADDO’S GOVERNMENT GENUINELY HAS SO LITTLE UNDERSTANDING OF THIS INDUSTRY AND SO LITTLE STRATEGIC CAPACITY THAT IT BELIEVES A 5% CARRIED INTEREST IS MORE VALUABLE THAN A 24% COMMERCIAL INTEREST THAT CARRIES OPERATING RIGHTS (AND COMES UP WITH SOME VOODOO-ECONOMICS “BENEFIT-COST RATIO” METRIC TO BAMBOOZLE THE PUBLIC.  PERHAPS SOMETHING MORE SINISTER HAS HAPPENED.  ONE DAY WE WILL KNOW.

Factual Errors

I will not deal here with the alleged “factual errors” cited by MoE. This piece is long enough as it is. Also, many of the claims about “factual errors” are addressed in the clauses of the Amendment Agreement that I have quoted. 

Ratification Process

There is however one issue that I would like to draw public attention to.  I am reliably informed that on Thursday 19 December 2019, the Minister presented the Aker amendment proposals to a joint sitting of the Parliamentary Committee on Finance and the Parliamentary Committee on Mines & Energy.  My information is that based on the Minister’s complete inability to justify these radical and patently unpatriotic measures, the meeting roundly rejected the proposals on a bipartisan basis and directed the Minister to go and rethink the entire project.  The Committees did not even bother to schedule another sitting to consider the proposed Amendments.  Two days later, on Saturday 21 December, without a further meeting of the two committees, a “majority report” was submitted to the full house recommending ratification of the Amendments.  Around midnight on Sunday 22 December, Parliament acting on this “majority report” ratified the amendments. It would be interesting to understand what miracle MoE and Aker worked in that 36 hour period to move Parliament (or rather the Majority) from outright rejection to positive endorsement. 

The Aker amendments are simply a multibillion-dollar betrayal of the national interest.  No amount of spinning or personal attacks can mask that fact.  The more MoE or other players try to defend it the deeper the hole they dig for themselves. 

Signed

Alex Kofi Mensah Mould

Accra, 29th  February 2020.

  nude ai Wow Kiki

Adnan Adams Mohammed

The International Monetary Fund (IMF) has warned the government of Ghana that it may not be possible to repay a US$2 billion bauxite-backed-loan it contracted with Chinese state company, Sinohydro, in 2018 which could lead to loss of collateral.

IMF concerns was captured in a new report released by the NRGI dubbed: “RESOURCE-BACKED LOANS: PITFALLS AND POTENTIAL”. Resource-backed loans have contributed to crippling debt levels in Africa and are shrouded in secrecy. These loans to governments, collateralized with oil or minerals, have been hidden from scrutiny for far too long and that must change, say the report’s authors.

Ghana’s government is obligated to repay a US$2 billion loan it agreed with Chinese state company Sinohydro in 2018. The repayment schedule requires a rapid ramp-up of bauxite production and refining, which the IMF has raised doubts about.

“The International Monetary Fund (IMF) has warned the repayment of the US$2.0 billion bauxite-backed-loan may not be possible and therefore could lead to loss of collateral”, the new report released, last week stated.

A 232 square kilometers Atewa Forest Reserve in Ghana’s Eastern Region where several billions of dollars in value of bauxite is deposited, up to five percent (5%) the bauxite deposits have been allocated to China through the China Development Bank. China would then pay Ghana with a variety of infrastructure projects including expanding the rail network, building new roads and bridges.

The government of Ghana estimates the country’s total untapped bauxite reserves at US$460 billion and is hoping to cash in on the rise in the price of alumina (refined bauxite). President Nana Akufo-Addo, in his Independence Day, 2018, address to the nation declared that, bauxite revenue was going to help fund his government’s much-trumpeted vision of ”A Ghana Beyond Aid”.

As many African countries struggle with Chinese debt, Beijing has been striking similar direct deals where precious minerals are exchanged for loans as is in the case of Angola (cash for oil) and in another deal with Guinea, to barter bauxite for infrastructure projects worth US$20 billion.

There is so much at stake for African economies and communities with resource-backed loans, but there is very little accountability and transparency and that has to change, said Silas Olan’g, NRGI Africa co-director in the report. “Borrowers and lenders must allow for greater scrutiny to ensure that these loans are sustainable and serve the interests of the people and the countries they are supposed to benefit.”

Silas Olan’g added: “The deals may already have been signed in Ghana and Guinea, but it’s not too late to come clean about the terms of the loan and to involve the communities who will be affected by the mining in meaningful discussions.”

Resource-backed loans have contributed to crippling debt levels in Africa and are shrouded in secrecy, according to a new report. These loans to governments, collateralized with oil or minerals, have been hidden from scrutiny for far too long and that must change, say the report’s authors.

A resource-backed loan is a borrowing mechanism by which a country accesses finance in exchange for, or collateralized by, future streams of income from its natural resources, such as oil or minerals. Researchers from the Natural Resource Governance Institute (NRGI) considered 52 resource-backed loans made between 2004 and 2018, with a total value of more than $164 billion; 30 of them, with a combined value of $66 billion, were made to sub-Saharan African countries.

Of the loans to sub-Saharan African countries considered by the researchers, 53 percent of the amount borrowed came from two Chinese policy banks: China Development Bank (CDB) and the China Eximbank. Most of the remainder was provided by international commodity traders, mainly to Chad, Republic of Congo and South Sudan.

The report, Resource-Backed Loans: Pitfalls and Potential, explores both the risks and opportunities the loans represent and offers policy recommendations that borrowers and lenders can implement to improve the practice, with a greater focus on borrowers.

Standard Chartered last week announced new business targets for supporting its clients as they transition to a low carbon economy as part of its Sustainability Aspirations.

By the end of 2024, the Bank commits to: providing USD40 billion of project financing services for infrastructure that promotes sustainable development; and providing USD35 billion of project financing services, M&A advisory and debt structuring services for renewables and cleantech projects (solar and wind)

Underpinning the aspirations, Standard Chartered also intends to reduce its emissions across its global properties by 2030.

With an office footprint spanning 60 countries, including many large emerging markets, the Bank will achieve net-zero emissions by only sourcing energy from renewable sources and continuing to pursue energy efficiency measures across its 12 million square feet of property.

Tracey McDermott, Group Head, Corporate Affairs, Brand & Marketing, commented: “Over the past 18 months, we have made a series of commitments which are all geared towards supporting the Paris Agreement on climate change and the transition to a cleaner, greener, fairer economy. We know that the investment required cannot be provided by governments and NGOs alone, so it is critical that investors embrace the Sustainable Development Goals at pace and scale.

“Our unique footprint means we are well placed to help get finance to where it matters most. That is why, as well as ceasing support for clients who generate more than 10% of earnings from thermal coal by 2030, we also have a renewed target for financing and facilitating USD35 billion of clean technology and renewables, and USD40 billion of sustainable infrastructure.”

Sunil Kaushal, Regional CEO for Standard Chartered, Africa and the Middle East, said: “It is estimated that emerging markets need an annual USD2.5 trillion investment to meet the SDG targets by 2030. A bulk of this investment will need to be focused on Africa and the Middle East, which is home to some of the key sustainable development opportunities. The financing gap in Arab countries has been estimated to be over USD 100 billion annually [1], whilst in Africa this figure stands between USD 500 billion and USD 1.2 trillion [2]. For the goals to be met by 2030, investors and banks need to coordinate and connect capital to promote sustainable development.”

“With our unique footprint into emerging and developing markets, we can use our banking knowledge, people, and products to catalyze capital to where it matters most for SDG financing. Africa and the Middle East region is home to some of the world’s fastest-growing economies, though we also face some of the world’s most pressing environmental and social issues. Our ability to solve for the issues here will have a tremendous impact on our 2030 ambition to meet global SDGs.”

Standard Chartered has a broad range of sustainable finance product offerings that can be deployed to help clients pivot their business towards a more sustainable model. In October 2018, it created the Sustainable Finance team and has since launched sustainable deposit products in London, Singapore, Hong Kong and New York; plus, a EUR500 million Sustainability Bond, the proceeds of which will be used to provide finance in areas aligned with the Sustainable Development Goals – including clean energy projects, smaller business lending and microfinance loans.

Source: APO Group

Adnan Adams Mohammed

Under the supervision of the Bank of Ghana, financial data company, Refinitiv Matching, has launched a live interbank Foreign Exchange (FX) trading for the first time in Ghana.

This market-leading Central Limit Order Book offers a new level of operation for FX traders with a minimum quoting of US$250,000. This is to help make the black market, which mostly dominants quoting prices, ineffective and unattractive.

Governor of the Bank of Ghana, Dr Ernest Addison expressed the importance of this key milestone to the Ghanaian financial market and the broader West African community.

“Ensuring that we have systems that promote transparency and standardization of our onshore trading ties in quite well with our Sustainability Banking Principles launched last year”, Dr. Ernest Addison said at the launch ceremony in Accra, last week.

“As the Bank of Ghana, we are deepening the foreign exchange market through the introduction of new solutions to improve liquidity and unlock the financial sector’s capacity. This is key for the stability of our market,” he noted.

Nadim Najjar, Managing Director for the Middle East and Africa at Refinitiv said, “We are excited to be launching Refinitiv Matching one of the leading anonymous electronic matching services available in the global FX marketplace, in West Africa. This collaboration between Refinitiv and the Bank of Ghana and local banks marks a key milestone in automating and digitizing FX trading workflows.

“Our customers in Ghana will now have access to real-time executable prices for over 60 currency pairs and 30 FX Swap currency pairs through Refinitiv’s FXT platform. They will now benefit from an end-to-end automated workflow, such as accurate price discovery, the certainty of execution and automated reporting.”

“We have worked really hard to get the Ghanaian Cedi (GHS) added to Matching,” said Nuno Neto, Performance Director for Trading from Refinitiv at the launch held in Accra. “We couldn’t have reached this key milestone without support from the market.”

“The trust and active collaboration of the Bank of Ghana and the banking community in Ghana have enabled the standardization of the onshore trading in Ghana while providing cost-effective and transparent interbank execution leading to a more innovative way of trading,” he added.

Refinitiv Matching is a leading industry solution that offers real-time credit screening, easy price discovery concentrated liquidity and efficient execution for FX traders.

It is one of the world’s largest providers of financial markets data and infrastructure, serving over 40,000 institutions in over 190 countries.

 

Adnan Adams Mohammed

The Ghana Heritage Fund (GHF), investment returns have improved 1.69 percent in the second half of 2019 as compared to the first half in the same year.

The GHF which is a part of the Ghana Petroleum Funds (GPFs), recorded a total return on investment of year to date of 6.4 percent during the second half of 2019, as compared to 4.71 percent in the earlier half of the year.

According to the semi-annual report on the Ghana Petroleum Funds for 2019 by the Bank of Ghana, the two-year annualized return of GHF was 7.61 percent whiles the three-year annualized return was 3.46 percent.

“The general fall in yields across all tenors coupled with the 75 basis points cut in US interest rates during the second half of 2019 led to an increase in the capital appreciation of bonds as their secondary market prices increased, improving the marked-to-market performance of the Ghana Petroleum Funds”, the GPF report stated.

The GPFs reserves at the end of the second half of 2019 were US$968.20 million which returned a net realised income of US$ 21.95 million.

Also, the Ghana Stabilisation Fund contributed 37 percent or US$ 8.21 million to total net income whilst the Ghana Heritage Fund (GHF) contributed 63 percent or US$ 13.74 million.

The GPFs reserves at the end of the second half of 2019 were US$ 968.20 million, of which the GHF was US$ 579.61 million and GSF was US$ 388.60 million compared to a total of US$ 866.38 million in the same period of 2018 (of which GHF was US$ 485.17 million and GSF was US$ 381.20 million).

By Prof. John Gatsi

A day after the Townhall Meeting by H.E Alhaji Dr. Mahamudu Bawumia in Kumasi, Hon. John Abdulai Jinapor delivered a lecture on Ghana’s Energy Sector in Accra to also address some important issues in that sector.

As part of the energy sector presentation by Hon. Jinapor, issues relating to the (in) appropriate use of the Annual Budget Funding Amount (ABFA) came up. Among the highlights was the issue of the use of a greater proportion of the ABFA on aspects of education as a priority area such that the disproportionate use of the oil revenue favoured just one programme (Free SHS) contrary to the wisdom of the Petroleum Revenue Management Act (PRMA) which dictates a balanced appropriation and utilization of petroleum revenue across specific sectors.

It is instructive to appreciate that the use of petroleum revenue as prescribed by the Petroleum Revenue Management Act, 2011 (ACT 815) as amended, was not intended to be guided by how political parties understand it but to follow the framework provided.

The PRMA requires that in every three years four priority areas should be presented to parliament for approval. Among the four priority areas presented and approved by parliament in 2017 includes physical infrastructure and service delivery in education and science and technology. The key guiding principle underpinning the management of petroleum revenue can be found in Article 36 of 1992 Constitution as appropriately highlighted in the preamble to the PRMA.

The summarized provisions in Article 36 became the main focus of the use of the ABFA in section 21 of the PRMA, which is to promote the rate of economic development, create equal economic opportunities for all and to ensure balanced and even development between rural and urban areas of Ghana.

The question then arises as to why other sectors among the four priority areas, e.g. physical infrastructure and service delivery in health received so much less ABFA resources? The next question is  what is service delivery in education and science and technology? Is it payment of fees under the Free SHS? 

My understanding of service delivery in education and science and technology includes- the direct school environment in terms of provision of laboratories, equipment, tools and logistics needed in a standard school setting. It also includes adequate provision of textbooks, functioning libraries, improved safety and security of students, teachers and other staff as well as the general welfare needs of schools. Service delivery in education should also take care of workshops and in-service training for teachers, staff promotions among others. To equate service delivery in education to payment of fees, hence prioritize it for ABFA resources is not what was envisaged by the PRMA. Finding sustainable source of funding for Free SHS or amending the PRMA to specifically accommodate payment of fees as a priority can however be explored by present and future governments.

Do we want to wait until another argument starts in this county about the fact that service delivery in health should mean health related bills of a certain class of Ghanaians so it also qualifies to attract ABFA funding? Parliament owes the citizenry a duty to forestall the potential misappropriation of the ABFA to the detriment of critical sectors envisaged and crafted in explicit language by the PRMA.

Adnan Adams Mohammed

Former Executive Director of Standard Chartered Bank, Alex Mould, has challenged the Resident Representative of International Monetary Fund (IMF) claims that Ghana’s debt servicing ratio to revenue for 2019 was around 30 percent.

According to the financial expert, the figure quoted by the IMF rep was not accurate. “It should rather be approximately 60%”, the former Banker noted.

He calculated that based on MoFEP data on Ghana’s 2019 Fiscals released in February 2020, Ghana’s interest payment was around GHC20 billion with debt amortisation (foreign debt alone) being about GHC11 billion.

“So adding interest and principal amortization (however, only for foreign debt) total debt service for 2019 was around GHC31 billion. And, according to the Ghana Revenue Authority, domestic revenue collected for 2019 was GHC52 billion”, Mr Mould who is also the immediate past Chief Executive of Ghana National Petroleum Corporation clarified.

“So in the ratio form; debt servicing to domestic revenue is 31:52 (in GHC). This, in percentage-wise, total debt servicing to domestic revenue will be approximately 60%.

“Even if he was referring to only interest payment in the debt service number, which ordinarily includes debt principal amortization, the interest-only-debt-service to domestic revenue is approximately 40% for 2019” he stressed.

Meanwhile, the IMF rep, Dr. Albert Touna-Mama, speaking at the recent Graphic Business/Stanbic Bank Breakfast meeting described the 30% debt servicing to revenue as twice as much compared to countries of similar features.

He further revealed that, government total debt position as at DEC 31, 2019 was GH¢215 billion, describing it as worrying the borrowing rate of Ghana.

“When we think about debt and borrowing, I want to talk about the fact that we don’t only measure it with respect to GDP. An important metric that we look at and in the case of Ghana is a metric that is of concern, that is, debt service to revenue.”

“We use debt service to revenue as a proxy of how sustainable the debt of Ghana is. At the moment, that ratio is close 30 percent. When we take that for countries of similar features, it should be below 18 percent. This is twice as much as what it should be. So, of course, we are concerned about the borrowing of Ghana,” he explained.

The World Bank has cautioned Ghana against heaping its external debt stating that the country is currently rated as a moderate to high-risk debt distressed country.

It further warned that, Ghana must tread cautiously in order not to cross acceptable thresholds of debt sustainability.

Consequently, the Finance Minister, Ken Ofori-Atta, announced in the 2019 budget that government is projecting to achieve GH¢67.1 billion in total revenue, representing 16.9 percent of GDP, in the 2020 fiscal year.

He noted that the country is expected to use GH¢21.7 billion which translates to about 5.4 percent of GDP to service interest on its debt.

Of this amount, he further said domestic interest payments will constitute about 76.3 percent and amount to GH¢16.6 billion.

Adnan Adams Mohammed

The Minerals Commission is proposing mining companies to contribute one (1) percent of revenue to fund a new community development vehicle, Community Development Agreement (CDA) which replace the usual Corporate Social Responsibility (CSR) in mining industry, after a holistic stakeholders consultation on proposals to amend the Minerals and Mining Act, 2006 (Act 703).

This proposal is a new provision being proposed by the Minerals Commission (“MinCom” or “the Commission”), the regulator of the mining industry under Article 42(3) to help coordinate properly and comprehensive towards closing the development gap that existing in almost all the mining community.

The CDA is expected to harmonize and regulate all CSR and other philanthropic activities the mining companies carry out currently based on their individual wills and policies which mostly do not address the pressing needs of the communities where mining activities are taken place.  

“A regulation will be drafted on how to manage the CDA and also details how the harmonizing of all the current funds the mining companies spent on community development activities”, Lawyer Martin K. Ayisi, Dep. CEO (Promotion & Development) at the Minerals Commission posited during a presentation at a workshop organized by the Natural Resources Governance Institute (NRGI) in Accra yesterday.

These were among other major reforms the Commission is proposing in the amendment of the Act 703.

Lawyer Nasir Alfa Mohammed, Policy Advocacy Officer at the NRGI in his critique of the proposals and the existing law acclaimed the proposals as generally good.

He, however, questioned whether the “CDA provision is an adequate remedy to illegal mining. Because when you ask the Mineral Commission the rationale for introducing the CDA, they will tell you it is for the communities to benefit from mining and also for the purposes to free prior and informed consent.

“The good of this is that, if you (mining companies) enter into a form of agreement with the communities and you begin your operations you are likely to be immuned from illegal mining activities.”

Meanwhile, West Africa Manager (Anglophone) of NRGI, Nafi Chinery in her closing remarks commended the MinCom for their enthusiastic, accommodating and well prepared before and during the interaction session.

She recommended to all other government department and agencies to emulate the proactive and productive working attitude to help achieve the best results in developing the country.

The CSOs validation workshop of the Commission’s proposed amendments follow a successful technical session organized last year and the enthusiasm it has generated for reform of the mining sector generally.

The consultation session is expected to produce three outputs: a comprehensive memorandum that highlight(s) CSO’s consolidated observations and recommendations for improving the government’s mining sector legal reform proposals; a consolidated report summarizing the concerns of civil society on the proposed amendments to Act 703 and the related draft legislative instruments; and a highlight of opportunities for CSO-led stakeholder engagements that can stimulate key action points for effective civil society advocacy on the proposed mining sector legal reforms.

In October 2018, MinCom requested memoranda (comments/proposals) from key sector stakeholders for possible amendment to the Minerals and Mining Act, 2006 (Act 703). Act 703 and the Minerals Commission Act, 1993 (Act 450) are the principal enactments that set out the framework that governs mining operations in Ghana.

Following the submission of memoranda by NRGI and several key stakeholders to the MinCom, NRGI, as part of its work on supporting progressive agents of change to influence legal reform in the mining sector, on 20 October 2019 convened a multi-stakeholder technical session at the Golden Tulip Hotel, Accra.

The 20 October 2019 technical session was very successful with the MinCom updating the stakeholders on progress made so far and NRGI and the other stakeholders expanding on their previous proposals for amendment to Act 703.