The Social Security and National Insurance Trust (SSNIT) has revealed that it has halted negotiations leading to the sale of a 60 per cent stake in some six hotels.
This is in line with a directive from the National Pensions Regulatory Authority (NPRA).
The Director General of SSNIT, Kofi Bosompem Osafo-Maafo disclosed this at a media engagement on the operations of the State Pension Trust.
He however added they will embark on more stakeholder engagement on the matter, to let all the partners and actors appreciate the need to reduce their interest in these hotels so they can get more from their investment in the sector.
Mr Kofi Bosompem Osafo-Maafo insisted that its stake in Labadi Beach Hotel has not been sold, adding even before this action by the National Pensions Regulatory Authority, negotiations had stalled, “on the payment model and other concerns that had come up.
The Director General of SSNIT added that these negotiations were done in good faith to ensure that they get the best out of SSNIT’s assets.
Asked whether SSNIT would have gone through the same route looking at the current challenges with the sale, the Director General said, “More engagement with all the interested parties would have helped to avoid all these current challenges.”
The Director maintained that “at a point in time, when assets are not performing a decision has to be taken, hence the need to sell some interest in these hotels.
“If anyone presents an offer that will help us get the best why don’t we take it “he noted.
NPRA’s instruction to suspend process
The Director General of SSNIT however described the letter coming from the National Pensions Regulatory Authority (NPRA) as surprising, looking at the fact that they had engaged them on these issues.
“We had met the Authority on all these issues only that our last meeting was inconclusive because we also had to go to the presidency for another stakeholder engagement with the Unions.
Background
The National Pensions Regulatory Authority NPRA in a letter directed the Social Security and National Insurance Trust to halt negotiations leading to the sale of its interest in some of the hotels owned by SSNIT to Rock City, a company owned by the Minister of Food and Agriculture, Bryan Acheampong.
The NPRA in that letter also revealed that it is engaging the Minister for Employment on this issue and other developments. Even before the NPRA sent this letter to the SSNIT, organized labour had been engaging with the government over the sale of these hotels, raising some objections to the process.
The Director General of SSNIT justified the sale insisting some of the hotels have failed over the years to pay dividends to SSNIT, while some have been incurring losses.
“Therefore, the institution took a decision to reduce their interest in these hotels so that they can share the risk with a strategic investor going forward.”
He revealed that in the case of La Palm, it has made losses in 11 years out of 15 years, and those who even did the valuation told them to pull the hotel down.
“SSNIT had long taken that decision to restructure interest in non-performing assets, including these hotels” the Director General of SSNIT noted.
“We have been faced with consistent losses by some of these hotels, frequent requests for maintenance funding, capital injection requirement, high expenditure cost.”
Procurement and Selection Process of a strategic Investor and valuation
According to the SSNIT head, the decision to dispose of some of their interest in these hotels started in 2018, when the board set up a steering committee.
“The committee comprised all the Board Chairpersons of the various hotels, three Board members and some management staff from SSNIT” he added.
The Director General added that the selection of SEM capital to carry out the valuation was done appropriately, denying the assertion that, they hand-picked the transaction advisers.
“SSNIT went through International Competitive Tendering (ICT) processes as prescribed by the Public Procurement Act, 2003 (ACT 663), as amended by ACT 914, for the selection of a strategic investor” Kofi Bosompem Osafo-Maafo.
“The Trust engaged a Transaction Advisor through the ICT method of procurement, with the publication of advertisements in the Daily Graphic on 14th November 2018 and in the Ghanaian Times on 15th November 2018. As of the 16th January 2019 deadline, fifteen (15) firms had expressed interest in submitting bids “he noted.
He added that approval was sought from the Central Tender Review Committee (CTRC) for the selection of a Transaction Advisor on 12th December 2019 and it was granted on 24th December 2019.
He also revealed that advertisements for an Expression of Interest (EOI) for a Strategic Partner for SSNIT Hotels were placed in the Daily Graphic on 3rd February 2022 and in the Ghanaian Times on 7th February 2022.
“The advertisement was also published in the Economist Magazine on 26th February, 2022” he added.
He said a total of nine (9) companies responded to the advertisements by submitting proposals on the 23rd March 2022 deadline.
According to him, the Entity Tender Committee (ETC), on 25th May 2022 considered the evaluation report on the EOI and approved the recommendation to invite the six (6) firms that qualified for the evaluation of the EOI to submit Technical and Financial Proposals for Private Participation in SSNIT-Owned Hotels.
These are Rock City Hotel Limited, Yaw Addo Development, Spartan-Ives, Temple Investments, Westridge Developers Ghana Limited, and Luxor Hotels Limited.
The Director General added that the bidding was done in a lot system, with the Hotels that were heavily bid being Labadi Beach and La Palm Hotel.”
Concerns of Interference and political exposure issues
The Director General of SSNIT also rejected allegations that undue pressure had been brought on them to sell their interest in some hotels to Rock City.
“We went through all the right processes to settle on this strategic investor”.
He also challenged claims that at the time of submitting their bid documents, Rock City had not been issued with a tax certificate by the Ghana Revenue Authority.
The Director General of SSNIT also admitted that issues about political exposure regarding this strategic investor may have played a role in the current opposition to this deal by sections of the public and some trade unions.
The Director General of SSNIT also rejected claims by former New Patriotic Party Chairman, Freddie Blay that, Spartan-Ives offered 200 million dollars for the purchase of the hotels.
“Freddie Blay only presented a bid and even that was 150 million dollars,” the Director General of SSNIT revealed.
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