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Parliament approves sale
of 70% VALCO shares to International Aluminum Partners
Accra, Nov. 7,
Ghanadot/GNA- 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 Aluminum 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.
Economic Parliament VALCO 5 Accra
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.
GNA
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