Government is considering divesting the Prairie Volta Limited (PVL), also known as the Aveyime Rice Farms/Factory, due to losses in production over the last few years, Deputy Minister of Food and Agriculture, Dr. Sagre Bambangi, has said.
According to the Deputy Minister, after a review of an independent assessment report of KPMG, commissioned by the Agricultural Development Bank (ADB), the ministry is seriously considering divesting its interest to a private commercial rice-growing company that will invest external capital into the company in a public-private partnership (PPP) arrangement for the potentials of the company to be unleashed.
The Deputy Minister disclosed this, when he appeared before parliament to answer questions posed by the Member of Parliament (MP) for North Tongu Constituency, Samuel Okudzeto Ablakwa, in parliament yesterday.
Mr. Ablakwa, a former Deputy Minister of Education under John Mahama led National Democratic Congress (NDC) administration, wanted, “to know from the Minister of MOFA what plans the government has to revive the Prairie Volta Limited, also known as Aveyime Rice Factory, in the North Tongu Constituency?”
In answering the question, the Deputy Minister said under the agreement the Government of Ghana agreed to use assets of the former Quality Grains Company Limited, comprising a rice milling plant with 60,000 metrics tonnes capacity per annum, a 1,286 Ha farm site irrigation infrastructure and machinery at its capital contribution to the project.
“Mr. Speaker, the assets of the government were valued at USD8, 216,756.00 of which one million US Dollar worth was used to offset payment of Government of Ghana shares and the balance on loan to the company. In sum, the Government of Ghana and the Ghana Commercial Bank held 30% each, respectively of the total shares, whilst Prairie Texas Inc. held 40%. In addition, Prairie Texas Inc. was also required to secure working capital of three million US Dollars.”
“But unfortunately, Mr. Speaker, Prairie Texas Inc failed to bring in the required working capital and operated on losses in 2011, 2013 and 2014 and only a marginal profit of GHS62, 002 in 2015. The company had shut down in 2015,” Dr Bambangi told parliament.
PVL is a joint venture company between a USA-registered company, Prairie Texas Incorporated (PTI) and the Government of Ghana, which was agreed in a memorandum of understanding (MoU) signed by the two parties on May 16, 2007.
By the agreement, PVL, the managing partner, owns 40 per cent shares in the company, while the government, the majority shareholder, owns 60 per cent through the Ministry of Food and Agriculture and the GCB Bank.
The company owns 1,250 hectares of land in the Central Tongu District in the Volta Region, of which 750 hectares has been cleared and 710 fully irrigated. PVL also holds lease rights from the government and the local community to a further 6,000 hectares.
With its current 770 hectares, PVL can produce a maximum of 7,000 tonnes of paddy rice a year, which is about 12 per cent of the installed capacity of its 1997 mill, which is in need of major refurbishment or better still must be replaced with a more modern and efficient mill.
Reducing the rice import bill was among the reasons the Rawlings administration decided to invest in a massive rice production project, the Aveyime rice farm, under the watch of the American, Juliet R. Cotton.
But the project that held so much promise at the time suffered a setback even before the first grain was bagged.
The simple and short of all was that some officials in the Rawlings administration, namely Finance Minister Kwame Peprah, Minister of Agriculture Ibrahim Adam, and Investment Policy Adviser, Dr. George Adja-Sipa Yankey, were jailed for causing financial loss to the state in April 2003 and for the way the project was managed.
Additionally, Mrs Cotton, also the Chief Executive Officer of the Quality Grain Company Limited, as the company was known, was also jailed in the United States in October 2002 for fraud and money laundering in connection with the rice scheme based in the eastern part of the Volta Region, near the banks of the Volta River.
The rice project facility situated in the Aveyime area in the Accra Plains, lies approximately 108 kilometres from the capital Accra and has, for half a decade, seen little or no activity until Prairie Volta took over in 2008.
Until the latest development, ever since it entered the rice farming industry in Ghana, Prairie has succeeded in increasing interest in locally produced rice. It has over the years been able to produce more than 15,000 metric tonnes of rice for the Ghanaian market. While a little over 10,000 tonnes had been milled and sold, the remaining has been turned into seedling for other farmers.
A major constraint in Ghana’s agricultural sector is how to finance commercial farming. Even though the Agricultural Development Bank was established to lead that mandate, commercial farms including Prairie are struggling to cope with the limited credit for the sector.
According to policy makers, the local rice industry is not able to satisfy the demand for rice because “a lot of the government interventions go to small-scale farmers, leaving the few commercial farmers on their own to source for their funds and also pay market rates.”
For the rice industry to be attractive to investors, there was the need for the government to create the environment where access to finance is made easy and at cheaper rates in addition to direct interventions, such as bearing the cost of land clearing.
Source: therepublicnewsonline.com/ Felix Engsalige Nyaaba