EDITORIAL: GoL, HPX Deal is a Gamble with Nation’s Investment Image and Benefit

MORE QUESTIONS THAN answers spiral as the Government of Liberia has finally bastardized the nation’s sole railroad built by LAMCO many decades ago and rehabilitated by the ArcelorMittal Liberia, formerly Mittal Steel. It has been reported that the Boakai-led Unity Party administration has formally put pen to paper for the use of the Yekepa-Buchanan rail by Ivanhoe Atlantic (formerly High Power Exploration, HPX). Though there are some observers who hailed the multi-user regime of the rail, conjecturing it is poised to unlock new investment frontiers, worrying questions remain, and are haunting the Boakai government.

EVER SINCE THE HPX wahala began back in 2022, economists and investment experts have been advising against it, as, according to them, some provisions seemed as attempts to exploit Liberia’s vulnerabilities. The fear of those vulnerabilities were probably reasons why the erstwhile Coalition for Democratic Change government was indifferent to most of the provisions of the Agreement. And, as many pundits suspected, most of the CDC government’s officials paid the price with sanctions. 

AT THE TIME of the HPX agreement discussions in 2022, both the CDC administration and investment experts reasoned that it amounted to what they call “coercion amid financial Distress” – since amendments to the agreement were made and expected to be signed at the end of the government’s fiscal period, a day before on March 30, 2022. According the sources, the timing raised suspicions that HPX deliberately delayed negotiations to pressure the government into signing a deal at a moment of financial urgency. It is not clear if this is not the same case with the UP government, which faces stark financial constraints with public payroll and other critical national development expenditures.

IT WAS ALSO argued by investment experts at the time that the HPX agreement contained severe financial penalties, imposing harsh financial consequences on Liberia should it failed to meet certain obligations. Those provisions were countered by the CDC government, knowing every well that it was provided therein that HPX structured the payment as an interest-free loan, and that any delays in the approval process—many of which could be outside the government’s control—would trigger financial penalties. There was also the issue with HPX’s exclusive rights and control over infrastructure embedded in Clause 5.1 (b) & (d), which required the government to use its rights under the ArcelorMittal Mineral Development Agreement (MDA) to compel ArcelorMittal to grant HPX third-party access to the Yekepa-Buchanan railway and port. And in order to avoid its own obligations, as the Agreement included clauses that allowed HPX to transfer its obligations to third parties while keeping Liberia locked into its commitments.

AS IT IS now stands yet again, with the economic and financial constraints facing the country, the same case that applied to the CDC government, it is not known immediately how the Agreement benefits Liberia and if the hamstrings are relaxed or removed. What is very clear is that as President Joseph Boakai leaves for a “privileged” called conference with a few African nations by the United States’ Donald Trump, and with simmering rumors about another round of sanctions flooding the rumor mill, the agreement with HPX which had long been dragged even under this ruling establishment was signed with breakneck speed—between the time invitation to Trump meeting and a few days to departure by President Boakai and delegation.

ASSUMING WITHOUT ADMITTING that such concerns inconsequential, or have been taken care of, the agreement is still not out of the park; number of critical questions still lingers. For instance, there are observers who are asking if the HPX access to the rail won’t stymie and disrupt the Mineral Development Agreement the government just signed with ArcelorMittal Liberia. The last time we checked, the rail, which was left by LAMCO for nearly two decades remained decrepit until the AML renewed it, with regular maintenance that no doubt is pinching to its investment in no small way financially. 

IT MUST RAISE questions to nation’s conscience, that ArcelorMittal Liberia just signed with Liberia an amended Mineral Development Agreement, and is poised for significant expansion, including a $20 billion concentrators—expansion that entails increased use of the rail and exportation of Liberia’s own iron ore shipments, more jobs for Liberians and more corporate social responsibilities, amongst other things. With the HPX agreement, there are questions as to whether Government is interested in the exportation of Liberian ore or foreign shipment.

IT IS GROSSLY unfortunate that HPX has succeeded in its fierce push of the Boakai government for the agreement towards to its sole benefit. It has succeeded in securing a lucrative deal having flipped the concession given them by the Guinean government. From all indications, it is clear the HPX Agreement is far from a win-win arrangement; it is rather a zero sum game won by the company and Guinea, and Liberia is the big loser. Sad!