Ghana Losing Millions Due to Diamond Firm’s Deal

The West African country of Ghana has lost around $3.7 million in revenues since Ghana Consolidated Diamonds (GCD) awarded a tender to Indian firm Balaji-Gemslust which has paid a lower than market price for its gems, according to the Ghanaian Chronicle.

Despite the sharp rise in international rough diamond prices since, the Indian company is still buying GCD’s stones at a relatively cheap rate, that is lower than the price of diamonds traded by local dealers.

At Akwatia, the site of GCD’s concession, dealers are selling mixed parcels of diamonds at $32 dollars per carat, while until recently GCD was selling to Balaji-Gemslust at an average price of $22 dollars per carat, the Chronicle reported.

The paper estimated GCD is losing at least $10 dollars per carat or $2 million on a 200,000-carat consignment. In the past two years, the GCD has supplied 200,000 carats to the Indian firm without going through the tender board, a process originally scheduled to take place every four months according to the company’s bidding procedures.

No tender has been opened to enable other interested parties to bid, a clear indication of bypassing the tender procedures, the Chronicle reported, adding that it had learnt that Balaji-Gemslust granted GCD an interest-free loan of $5million in return for buying its diamonds at low prices.

The Indian company has denied this report, commenting it operates according to global diamond price changes, which makes manipulation of the system impossible.

Currently, GCD is producing between 10,000 and12,000 carats per month, but due to the suspected deals in its business with Balaji-Gemslust, whenever assortments of its products are made, the medium sizes are sold at $32 dollars, with the rejected going for a price of $10 dollars, and thus making an average price of $23 dollars per carat.

The paper said according to sources, the Ghanaian government loses close to $170,000 on every 10,000 carat consignment at the end of the month, an indication that for the last 22 to 23 months that the Indian firm has been buying

Meanwhile, the board and management of the company have remained tightlipped on the issue, but information gathered by the paper has it that they are girding their loins to open fresh bids in October, this year.

Balaji-Gemslust says the interest free loan of $5 million was never part of the agreement that it would supply products at a cheap price and that if the loan is not approved by government by the end of next month, the company may collapse.