Senate Approves Weah’s BAO CHICO Deal
-- But the public, whom the Senators work for, do not know the content of the agreement, which the Executive claims will create jobs
The Senate has passed one of President George Weah's foremost legislative priorities -- the BAO CHICO mineral agreement -- but the deal’s clauses remain in secrecy.
The 25-year agreement opens the way for the Chinese Company to mine Iron Ore in Gbarpolu County for that period. It was debated for almost two hours with Senators recalling previous agreements, ratified by the Legislature that yielded little or no fruits, leading to citizens’ pressure and accusation that they do not exercise their oversight responsibilities.
However, the Senators, despite raising these concerns, in light of the agreement being kept secret from the public, still went ahead and affixed the signatures for passage, which now awaits Concurrence from the House of Representatives before being sent back to the President.
The Senators’ concerns come as they have the power to amend the deal, approve or reject it, which they believe, like any other concession deal, is loaded with unfavorable clauses for the country. But it is unclear if they did so.
President Weah had said that the BAO CHICO Resources deal would bring huge direct benefits in the forms of employment and revenue, including the payment of all taxes and duties; payments of royalties, and a signature fee of US$3 million.
However, the President did not state the total number of jobs the concession is expected to create.
The agreement is for the extraction of iron ore, to be operated under a Class A mining license for an initial term of 25 years in Gbarpolu County. The company’s investment is in the tune of US$500 million, aimed at improving the country’s economy, creating job opportunities and scholarships for citizens as part of its support to the Government’s Pro-Poor Agenda for Prosperity and Development (PAPD).
It is expected to bring in an annual social contribution of US$300,000 and, after five years, escalate to US$500,000 until the end of the term. Also, the addition of US$10,000 is expected for Gbarpolu County as General Education Funding, while US$50,000 will be provided annually as Scientific Reserves Fund -- whatever that is.
But the deal’s clauses remain in secret and come three years after the Weah administration announced a swap deal with China that will see Liberia exchange its natural resources for US$2.5 billion as financing for the country’s development. However, for a US$500 million deal, it appears there is another US$2 billion outstanding.
At a press conference at the time, Finance Minister Samuel Tweah disclosed that the agreement with China was an “Investment facility – a sort of monetization that would leverage the country’s natural resources for hard currency – and that resources extraction would commence after conducting a feasibility study to determine the exact value.
“Let me be very clear on it, this is not a loan. It is an investment facility; a framework entered into between the China Road and Bridge Corporation and the Government of Liberia under the FOCAC arrangement to unveil US$2.5 billion for financing the country’s development over the next five years,” Min. Tweah disclosed after he had returned from China along with President Weah and others attending the Forum on China Africa Cooperation (FOCAC) in 2018.
Meanwhile, Gbarpolu County Senator Daniel Naathen has hailed the passage of the deal, which he said will bring relief to the people of Gbarpolu by fostering infrastructure development and the improvement of the lives of citizens in the county.
Sen. Naathen's remarks come after Senators Bartekwa and Taylor have endorsed the Bao Chico deal, with caution — suggesting fundamental changes in the way concession agreements are negotiated for the benefit of affected communities.
At a joint hearing of the Senate Committee on Concessions, Investment, Mines, and Energy last week, the senators expressed mounting frustration at government negotiations which benefit concessionaires, to the detriment of the people.
The two lawmakers recalled that adequate housing facilities have not been provided by several concessionaires in the past, for which they expressed regret that such does not represent the dignity of employees; and requested that the company social development fund contribution be increased from US$300,000 to US$850,000.
It is also unclear whether that appeal was included in the deal before passage. The Chinese Company, owned by China Henan International Cooperation Group Co. Ltd and is expected to mine within the area specified on the license which covers a total area of 87.4km2 within Gbarpolu County.
More to that, it is unclear whether the Bao-Chico agreement is restricted only to the exploitation of iron ore deposits or other minerals.
Gbarpolu County is more known for precious mineral deposits such as gold and diamonds, not iron ore. There is no record of the company prospecting for iron ore in Gbarpolu County.
The deal comes just a few years after the US$2.6 billion agreement, which was signed with the China Union in 2009 under the administration of then-President Ellen Johnson Sirleaf to excavate iron ore from the country’s former Bong Mines, did not go as planned, as the company remains shut down since 2014.
Since then, the iron ore concession – the area where the ore mining was done – only boasts of idle machines gathering rust. The company, according to its management, had to close due to the fall in the global price of iron ore and the impacts of Ebola in 2014.
The 25-year China Union agreement was expected to generate 3,000 to 4,000 jobs with an additional 15,000 indirectly, which hardly came to fruition.
During the administration of President Ellen Johnson Sirleaf, for example, 64 out of 66 concession agreements passed into law were declared bogus by the Moore-Stephens audit report.
The Sirleaf government never challenged the validity of that report.
Following Tuesday’s passage, the Legislative instrument will be forwarded to the House of Representatives for concurrence and subsequently sent to President George Manneh Weah for approval.