Renegotiating Transnational Investment Agreements: Lessons for Develping Countries from the Ghana-Valco Experience
This article describes the use of the renegotiation process to resolve problems that arise in the relations between participants in transnational investment. It draws conclusions from the successful renegotiation of an agreement executed in 1962 under which the Ghanaian government guaranteed bauxite and hydroelectric power supplies to support the smelting operations of the Volta Aluminium Company, Limited (Valco) in return for revenues from taxes and from payments for electricity, water, and use of the country’s port facilities. The agreement between Ghana and Valco was entered into as part of the Volta River Project (VRP). This project was an investment scheme that involved construction of a hydroelectric dam by the Volta River Authority (VRA), a government agency, to provide sufficient power for the production of aluminum at a smelter. The smelter was constructed and owned by two American transnational companies- Kaiser Aluminum and Chemical Corporation (Kaiser) and the Reynolds Metals Corporation (Reynolds) – through Valco, their Ghanaian subsidiary.