Monday, September 30, 2013

US commits US$7bn to African energy sector

The United States is committing more than US$7billion in financial support over the next five years to African countries, including Ghana, to directly address constraints in electric power generation and help pave the way for energy sector reforms.

The investment support under the “Power Africa” initiative is US President Barack Obama’s new plan to double access to power in sub-Saharan Africa through bringing to bear a wide range of US government tools to shore-up investment in Africa’s energy sector. 

“The U.S Power Africa partner countries, including Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania, have set ambitious goals in electric power generation and are making the utility and energy sector reforms necessary to pave the way for investment and growth. 

“Power Africa takes a transaction-centred approach that provides incentives to host governments, the private sector, and donors,” Mr. Andrew M. Herscowitz, Coordinator for the Power Africa initiative, told journalists in Accra at a roundtable discussion.

He explained that the U.S government will work with host governments to further develop delivery units charged with driving progress on specific projects.  

These delivery units, he said, will help increase technical skills and accelerate energy sector regulation, market structure and environment reforms.

He said the establishment of a delivery unit in Ghana will be closely coordinated with the Millennium Challenge Corporation’s (MCC) compact slated for signature in 2014.

“From policy and regulatory best practices to pre-feasibility support and capacity building, to long-term financing and technical assistance, Power Africa will provide coordinated support to help partner countries expand their generation capacity and access.”

Mr. Herscowitz mentioned that Ghana seems to be well-positioned and is on track already in terms of reforms in the energy sector with specific items that need to be achieved.

He said: “There are some 170 items that the MCC and USAID have identified and are working with the government of Ghana and agreeing upon these areas in order to achieve the market conditions that will create the opportunities for growth in the energy sector.

“I am confident that the Power Africa initiative will help achieve those reforms, such as undertaking feasibility studies to pave the way for US investments.”

The country’s power output currently stands at 2,311 megawatts (MW) with plans to increase generation to 5,958.5MW by 2016, according to Energy Ministry figures.

The power sub-sector requires investment of US$4.2billion, according to a study conducted by the Energy Ministry in October 2011.

The International Monetary Fund (IMF) in April 2013 warned that if Ghana fails to solve its energy crisis, it could curtail the country’s economic growth currently led by the services sector -- which mainly depends on reliable power supply.

“Energy sector problems could curtail growth,” the IMF said in a statement.
Even though the power blackouts seem to be over, the IMF has cut Ghana’s projected growth to 7% for 2013.

“As energy problems have now subsided, the mission expects full-year growth of about 7%, compared with 8% in 2012,” the IMF statement said.

Friday, September 27, 2013

Job-cut fears hit miners...Newmont, AngloGold anticipates cuts

Newmont Ghana says approximately 300 of its miners are expected to lose their job by the end of the fourth quarter of 2013, as part of the mine’s ongoing operations to streamline cost structure and improve business efficiency.

The massive job-cuts reflect the company’s work to improve its increasing cost structure while creating value for all its stakeholders.

“Ongoing price volatility and steadily rising costs create intense pressure for us to continuously improve our efficiency and effectiveness to ensure that our operations are profitable and sustainable.

“We face some very difficult decisions in streamlining our organisation and are committed to treating people fairly throughout this process,” said Dave Schummer, Regional Senior Vice President -- Africa Operations.

Officials at the Newmont’s Corporate Communications office told B&FT in a telephone interview that discussion and negotiations are ongoing regarding the compensation and severance packages for affected workers.

“We are in discussion with the labour unions as well as the Ghana Mine Workers Union,” the official confided.

Other mining companies in the country are contemplating a similar strategy because the industry challenges and tax hikes are bringing enormous pressure on their operations.

The mining industry is again faced with numerous global challenges, including the fall in gold prices and rising cost of production.

Mining giant, AngloGold Ashanti’s (AGA) Obuasi Mine announced imminent job-cuts of approximately 430 of its miners, partly due to a fallen gold price on the global commodity market and its broader revival strategy.

The increasing production cost and dwindling gold prices has been a bane in the Ghanaian mining industry.

The cost structure at AngloGold Ashanti’s flagship Ghana gold mine is unsustainable and the company is looking to make cuts to counter rising costs and falling production, Chief Executive Srinivasan Venkatakrishnan is reported to have told Reuters in an interview.

Production costs per ounce have more than doubled since 2008 at Obuasi, which is Ghana’s largest mine. A fall in gold prices this year has worsened the financial strain and the company's Ghana unit is relying on its parent company for funding.

"Obuasi is currently making losses at the operating level ... The current cost structure at the operation is clearly unsustainable," Venkatakrishnan told Reuters via email

AngloGold will spend US$30million to US$40million this year on a long-term plan to build a ramp to improve access to the ageing Obuasi mine and speed mechanisation in a bid to raise production volumes and lower costs there.

"We are looking across the business at reducing costs and improving productivity by investing capital in the new ramp access," Venkatakrishnan said.
The mine's biggest expenses are payroll and electricity. Venkatakrishnan said the company wants to eliminate wasteful expenditures and is also considering worker lay-offs.

PricewaterhouseCoopers (PwC) report has cited that the mining industry is confronted with a severe confidence crisis based on whether costs can be controlled, return on capital will improve or commodity prices will not collapse, among others.

Mining stocks fell only slightly last year, PwC said, but they plunged by almost 20 percent in the first four months of 2013. And while over the past decade the mining industry has outperformed the broader equity markets, this trend has recently changed.

The PwC report said regaining confidence in the industry depends on how the companies respond to rising costs, increasingly volatile commodity prices, and other challenges such as resource nationalism.

But despite the problems “it’s not all bad news”, the report said. “Production volumes and dividend yields are up; and while prices have fallen, they have not crashed,” it added.

Figures from the Minerals Commission indicate that the mining industry attracted US$1.0billion in total investment inflow into the country in 2012. These investments came from producing, exploration and support Service companies.

The multiplying effect of this investment in the country’s economy cannot be overestimated.

The Bank of Ghana also reported that the mining industry’s contribution to total merchandise export earnings was about 43 percent in 2012.

Data from the Ghana Statistical Service show that the mining sub-sector grew by 23.5 percent in 2012. This compared favorably with the 18.8 percent it achieved in 2011.

Furthermore, the Ghana Revenue Authority (GRA) has stated that the mining sub-sector maintained its position as leading contributor to the authority’s domestic tax contribution in 2012.

The total payment from the mining industry to the authority’s chest was approximately GH¢1.5billion in 2012.  This amount represents about 27.04 percent of GRA’s total domestic collection in the year.

The 2012 collection was an increase of 45 percent on the GH¢1.03billion it collected from the mining industry in 2011. The hike was as a result of increased minerals revenue due to higher gold price and marginal increases in output, which translated into higher mineral royalty and corporate tax payments.

On corporate tax, withholding tax and levies, the mining and quarrying sub-sector contributed about GH¢894million to the GRA’s contributions -- representing about 37 percent of the total corporate tax collected by GRA in 2012.

 The mining sector maintained its position as the highest payer of company tax during 2012.

Mineral revenue from producing members of the Ghana Chamber of Mines was up 14 percent to US$5,447,306,422 from the US$4,761,748,688 recorded in 2011.
The increase was largely attributable to gold revenue, which went up on the back of appreciation in realised gold price and output.

Meanwhile President John Maham says "Government is very concerned about what is happening and is looking out for options to solve the problem”.

Mahama urged mining companies to cut costs and employ more Ghanaians rather than expatriates. However, he ruled out a reduction in corporate income tax on mining companies, which is currently fixed at 35 percent.

Economy expected to slow down

The country’s economy is expected to grow provisionally at 7.4 percent for the year, compared to a 7.9 percent growth rate recorded in 2012, the Ghana Statistical Service (GSS) has said.

Gross Domestic Product (GDP) for the second quarter of the year grew by 6.1 percent year-on-year, while non-oil GDP expanded by 5.8 percent. The total value of GDP amounted to US$44.2billion with a per capita income of US$1,667.

Government, in its budget statement, projected 8 percent end-year growth with support from oil production.

Dr. Philomena Nyarko, Government Statistician who was speaking at a media conference in Accra, explained that the services sector contributed 50.6 percent to the second-quarter growth rate, representing the highest contributor to the total value of GDP. The sector’s growth rate however fell to 9.2 percent from 10.2 percent in 2012.

This was followed by the industrial sector with a growth rate of 2.5 percent, while the agriculture sector showed a negative growth of 3.9 percent.
The International Monetary Fund (IMF) has forecast full-year growth of about 7 percent for Ghana in 2013. The Fund has also said government’s budget deficit target of 9 percent of output is under threat from significant challenges during the first seven months of the year.

It said lower-than-expected revenues and overruns in the wage bill, electricity subsidies, and high interest payments on public debt are putting the public finances under stress.

The Bank of Ghana (BoG), which held its policy rate for a second consecutive meeting at 16 percent last week, said the budget deficit in the first seven months of the year was 6.3 percent of GDP against a target of 5.6 percent.

It said total fiscal revenue and grants was GH¢10.4billion, below the target of GH¢12.5 billion -- mainly due to shortfalls in revenue collections and poor disbursement of external grants.

While government responded to the revenue gap by keeping total expenditure below target, spending on wages and interest payments exceeded their targets.

The wage bill, which was the main cause of fiscal dislocation in 2012, amounted to GH¢5.5billion between January-July against a projection of GH¢5.1billion. Interest payments breached its GH¢1.8billion target by GH¢0.8billion.

Gov’t, Netherlands to begin talks on expanding ports

Talks are expected to begin between the governments of Ghana and Netherlands for the development and expansion of the country’s sea ports to meet the growing volumes of maritime trade.

The negotiations will focus on considering Public Private Partnership (PPP) model in ports expansion and logistics among the two countries.

“We expect some negations to begin soon. We  are trying to  promote a model of PPP in Ports expansion and development as we are doing in Netherlands with our largest port expansion project.

“Government does not have to invest its own money in Port expansion. PPP is a model for Ghana to follow particularly as its budget is over stretched,” said Hans Docter, Kingdom of Netherlands Ambassador to Ghana at a news conference in Accra.

“We are both the gateways to our backyard region and so it is important to develop our ports to support trade in our respective regions,” he said.

He said choosing people from the Rotterdam port, the biggest in the world, and the Amsterdam port, also the fourth largest in the world, was to ensure that The Netherlands had something to offer Ghana.

“This is to enhance the already strong trade ties between the two countries,” he stated.Trade volumes between the two countries in 2012 grew to 1.1 billion
Euros from Ghana and 900 million Euros from The Netherlands, compared with a 2010 figure of 400 million Euros from each side.

“For the Embassy of the Kingdom of The Netherlands in Accra, strengthening our economic ties is a top priority. Economic diplomacy, support to Dutch companies, as well as promoting opportunities for Ghanaian businesses in The Netherlands, are core competencies of the Embassy,” Docter stated.

Docter announced that a group of 30 companies in The Netherlands will be in the country on a trade visit to explore mutual business opportunities.

During the visit, specific attention will be given to developments in the ports and logistics sector of the country because of the expertise in managing and developing ports, as well as optimizing related logistics.

“The sector is important to the development of Ghana’s private sector and economy of the entire West African region.”

He explained that there would be a symposium organized by the Port Development Partnership (PDP) African-Netherlands to find ways of establishing a sustainable and long-term development of African main ports.

Alongside this visit will be the berthing of the largest naval vessels in the Dutch navy. HNLMS Rotterdam, aimed at strengthening maritime security along the West African coast.

The vessel is expected to be in the country as part of the “Africa Wind” military exercise to engage in a joint-military exercise with the Ghanaian navy.
Boukje van Turenhout, Project Coordinator of Netherlands African Business Council (NABC) with 300 companies operating in Africa, said ports and logistics were an interesting aspect of doing business in Ghana.

“We will be finding local companies to partner with and work to enhance trade relations between Ghana and The Netherlands,” she stated.  
Turenhout, hinted that 15 of the visiting companies will work with Ghanaian stakeholders to develop the main ports and new ones the Ghanaian government planned to build.

Current port expansion project

The Ghana Ports and Harbours Authority (GPHA) has already signed an agreement with the China Harbour engineering Company (CHEC) for work to begin on the first phase of the 150-million-dollar Takoradi Port Infrastructure Development Project.

B&FT has gathered that expansion works on the Takoradi Port is currently underway in earnest following the arrival of vital equipment for the project.
When completed, the project is expected to position the port to receive bigger vessels, improve the turn-around time and to eliminate double handling of cargoes.

Two construction firms, Messrs Jan-de-Dul from Belgium and China Harbour Construction of China are executing the three-year project. The first and second phases of the project  is valued at  US$344 million.

Messrs Jan-de-Dul is  responsible for the extension of the breakwater, the bulk jetty, dredging, as well as backfilling estimated at €197 million, while China Harbour Construction will be constructing the roads and superstructure, as well as stuffing of the log pond at a cost of US$150 million.

Mfantsipim launches 137th Speech Day

Mfantsipim School, Ghana’s oldest senior high school has launched its 137th Speech and Prize Giving Day at Cape Coast in the Central Region.

The week-long programme of activities planned to mark this year’s Speech Day would begin from November 2 to 10, 2013 under the theme: “SECONDARY EDUCATION: NEED FOR A NEW MINDSET AND PARADIGM”.

The programme line-up for the week-long celebration include a career guidance and counseling for the students, homecoming, donation to the Lighthouse Children’s Home, fundraising dinner, float through the principal streets of Cape Coast, clean-up exercise of the Technical Block of the School and thanksgiving service on Sunday, 10th November.

The 137th Speech Day which would be climaxed on Saturday, 9th November, 2013 is jointly being organised and sponsored by the School and the Mfantsipim Old Boys Association (MOBA) 1963, 1973, 1983, 1993 and 2003 Year Groups, who would be making cash and kind donations towards amongst others the School’s Integrated Biogas Project.

According to the Official Programme for the event, the Special Guest for the Speech Day is Kwesi Dei-Anang (MOBA 1963), Associate Professor, University of Mainz, Germany; Consultant Neurosurgeon; and Specialist in Painsurgery. 

He headed the Department of Neurosurgery of the Red Cross Pain Center in Mainz from April 1990 till his retirement in April 2010; and credited with numerous publications in Neurosurgery and Pain Management. 

Prof. Dei-Anang has worked and visited many renowned Medical Units worldwide, including USA, Brazil and Taiwan; and has served as an examiner for the Rhine-Hesse District Medical Council since November 1996 for Board Examinations for Neurosurgery.

Mr. Moses Baiden, Junior (MOBA 1983) is the Guest Speaker for the 137th Speech Day. Moses is an Entrepreneur, and a Barrister at Law; and currently the Promoter, Chairman and Consultant of the Margins Group of Companies, a multinational African Company built on 4 key platforms and present in 7 countries as leaders of the digital identity and security business. 

He is also a Director of the Scandinavia Investments APS 2012 and the International Danish Finance Group (IDFG), as well as the Founder & Executive Chairman of the Margins Real Estate Limited. He was also nominated and selected in International Who Is Who of Professionals in 1997 as well as the Founding Director of the Public Safety Institute Ghana, a non-profit organisation.

The launch also announced Dr. Emmanuel Dornu Kitcher (MOBA 1973), a Consultant Ear Nose and Throat (ENT) Surgeon at the Korle Bu Teaching Hospital and a Senior Lecturer at the University of Ghana Medical School. 

He is the Head of the E.N.T. Unit at the Department of Surgery University of Ghana Medical School from 2002-2013; and the Head of Allied Surgery Department, made up of ENT Unit, Eye Unit and Dental & Maxillofacial Surgery Unit of the Korle Bu Teaching Hospital from 2011 to 2013. 

Emmanuel is also an External Examiner at the School of Medical Sciences, Kwame Nkrumah University of Science and Technology (KNUST), West African College of Surgeons, and Ghana College of Physicians and Surgeons.

Rev. Daniel Ogbarmey Tetteh (MOBA 1983) was finally named as the Guest Preacher for the Sunday, 10th November, 2013 Thanksgiving Service which will be held to bring the curtains down on the event. 

Daniel is currently the Executive Director and Chief Investment Officer of Databank Asset Management Services Limited; and built Databank Research team into a formidable research house supplying economic and equity research to many economic actors, including leading media houses, local and international such as Financial Times, CNN and Bloomberg. Under Rev. Tetteh’s leadership, Databank Research was awarded the prestigious Best Africa Research Team (2007) award at the Africa Investor Ai Index Awards held at the London Stock Exchange in 2007.

Launching the event, the Paramount Chief of Essikado Traditional Area, Nana Kobina Nketsia V stressed the need for old boys to always endeavour to be thankful to their alma mater and contribute their quota towards the development and expansion of the School.

Nana Nketsia V stated that it was time for alumnae to shift from “the government will do it”, to “we will do attitude”; and added that the current situation in the education sector would not permit the government alone to provide quality education in the country, hence the need for all to support.

The Omanhen appealed to the Old Boys to take the School as their immediate family and ensure that family values and traditions are maintained as part of the broader Mfantsipim brand.

“The School has played important role towards national development and we will be thankful to the founding fathers for establishing Mfantsipim School with a nationalist mission”, he concluded.

The acting president of the 2013 Sponsoring Year Groups, Mr. Ekow Budu Manuel charged all year groups to take part and continue to contribute significantly towards the celebration of the event to make it a success.

Mr. Koame Miezah, the Headmaster of the School thanked the various sponsoring year groups for their zeal, active participation and support for all activities of the School.

Newmont maintains strong environmental rating

Newmont Ghana has recorded another strong performance in the Ghana Environmental Protection Agency’s (EPA’s) 2012 AKOBEN ratings.

The company’s Ahafo Mine and Akyem project received high AKOBEN scores for best practices in environmental management and performance, and for its corporate social responsibility in addition to being assessed as fully complying with all mandatory legal requirements.

“The EPA’s AKOBEN environmental rating and disclosure programme encourages improved environmental and social performance across industries,” Randy Barnes, Regional Vice President, Environment and Social Responsibility said.

 “The Ahafo Mine’s second consecutive ‘Blue’ rating is an indication of our commitment to high environmental and social responsibility performance.”

EPA’s AKOBEN audit measures the environmental performance of mining and manufacturing companies based on their day-to-day operations.

In 2010, Newmont Ghana’s Ahafo Mine was one of only two mining companies to obtain a ‘Blue’ rating in the AKOBEN audit.

The Akyem project, which is in the construction phase and expected to begin production in the fourth quarter of 2013, received an overall ‘Orange’ rating. 

Although the project received high ratings in its environmental, management and performance and corporate social responsibility, the audit process provided input for further improvements in the project’s environmental management programme and practices.

Speaking about the Akyem project’s ‘Orange’ rating, Mr. Barnes said, “The Akyem project was audited during the construction stage. The AKOBEN audit has assisted the project to further refine its environmental management programme and practices.

“We would like to acknowledge our employees, community and all other stakeholders for their contributions to our goal of operating in a safe and environmentally responsible manner and look forward to working with them to continuously improve our environmental and social performance,” said Mr. Barnes.

Newmont pays over Gh¢9.3m to development foundation

The Newmont Ahafo Development Foundation (NADeF) has received over Gh¢9.3million from Newmont Ghana Gold Limited (NGGL) as the company’s 2012 contribution to the Foundation.

The mining giant has contributed a total GH¢28.9million to NADeF since its establishment in 2008. Newmont contributes US$1.00 per ounce of gold produced and one percent of its annual net profit to the Foundation.

“The fulfilment of this promise shows Newmont’s commitment to supporting sustainable community development among the host communities,” said Paul Sowley, the General Manager of Environment and Social Responsibility at Newmont Ahafo Mine.

The support targets 10 communities in the Asutifi North and Tano North Districts of the Brong Ahafo Region.

The NADeF has six main thematic areas of development, including human resources development, economic empowerment, infrastructural development and social amenities. Others are cultural heritage and sports, and protection of natural resources.

The Foundation has completed and handed over about 43 infrastructural and social amenities including community libraries, teachers’ and nurses’ quarters, ICT centres and schools.

Members of the communities have also benefitted from scholarship and apprenticeship programmes, accessed micro credit and support for business start-ups.

Board Chairman of NADeF, Kwame Saarah-Mensah, expressed appreciation to Newmont for fulfilling its commitment to development in the Ahafo communities.

“Ahafo, especially the communities under NADeF, can attest to the positive development as a result of the Foundation’s establishment by Newmont and the Ahafo Community,” he said.

A component Fund is invested as an endowment to help continue development projects after the mine-life is over.

AFC secures €50 million credit line

The Africa Finance Corporation (AFC) has secured a €50 million credit line provided by the Society for the Promotion and Participation for Economic Cooperation (PROPARCO) with the participation of European Financing Partners South Africa (EFP). 
The EFP tranche totalling €25 million will be drawn in US dollars and will be utilised to fund Nigeria and Anglophone Africa-based projects, while the PROPARCO €25 million tranche and drawn in euros, will support euro-denominated investments with a focus on Francophone African countries.

The announcement follows AFC’s recent agreement to secure a US$60million joint facility from the German Investment and Development Corporation (DEG) and Netherlands Development Finance Company (FMO).

These facilities form part of an on-going expansion of the AFC’s capacity to lend to value added infrastructure projects across the continent.

AFC, a multilateral finance institution, was established in 2007 with an initial capital base of US$1billion, to be a catalyst for private sector infrastructure investment across Africa.

AFC was established to help fill a critical void in providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, and is increasingly being seen as the benchmark institution for private sector-led investment in the core infrastructure sectors of power, natural resources, heavy industry, transport and telecommunications.

Andrew Alli, President and Chief Executive Officer (CEO), AFC, commenting on the lending facility said: “This facility is an important milestone for AFC and further enhances our ability to on-lend to infrastructure projects in Africa across diverse geographies and in a variety of currencies.

“The completion of this facility is a strong endorsement of our approach to investment on the continent by leading multilateral financial institutions. We are also very pleased to deepen our relationship with PROPARCO and the wider AFD group as we jointly seek to expand our investment footprints across Africa, especially within the Francophone African countries.”

Marie-Hélène Loison, Deputy CEO of PROPARCO also said: “We are very pleased to be partnering with AFC.

“Following the successful completion of our due diligence process in November 2012, we went a step further to convert our initial discussion of bilateral funding into a club deal by bringing in members of the European Financing Partners (EFP) into the transaction.

This partnership highlights PROPARCO’s strategy to finance investments that are economically viable, socially equitable, environmentally sustainable and financially profitable, and we are delighted to be a partner with AFC.”

AFC is an African-led international financial institution, established in 2007 whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets. 

AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of infrastructure projects in Africa.

AFC’s current authorised share capital is US$2.0billion with shareholders’ funds of US$1.2436billion and a 2013 funding programme of US$700million.

To complement its shareholders funds and enhance its financing capacity, AFC has completed several other bilateral borrowings from other DFIs and international commercial banks -- including a landmark US$200million funding facility from the African Development Bank.