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Poor revenue collection cause of desalination plant woes – Operators

Teshie Desalination plant

The operator of the Teshie Desalination Plant, Hydrocol limited, has blamed the woes of the plant on what it called the Ghana Water Company Limited’s (GWCL) failings in revenue collection.

Speaking on Eyewitness News, the CEO of Hydrocol limited, Henry Ofori, was adamant that “the biggest problem we have with Ghana Water is the non-revenue collection… If they were able to solve that problem, they wouldn’t have a challenge with this plant.”

The GWCL is reportedly making GHc 6m in losses monthly from the plant, which cost $126 million to set up.

A consolidation of all the costs of the plants culminates in GWCL buying the water from the plant at about GHc 6.5 per cubic meter, and selling at the regulated Public Utilities Regulatory Commission rate of about GHc 1.5 per cubic meter.

This arrangement meant that, the GWCL is said to be losing about GHc5:00 for every cubic meter of water sold from the Teshie Desalination Plant.

Citi News‘ checks indicate that the GWCL makes payments of GHc 8 million a month to the financiers of the project, although it makes only GHc 2 million by supplying treated water from the plant.

GWCL not independent enough

Mr. Ofori said Ghana water is struggling to be independent and self-sustaining because they are used to government always stepping in to bail them out.

“They [GWLC] were never used to having to pay for water. This was all set up by the government for them and for many years, they were selling water and not accounting for what they were selling,” he said.

As it stands now, the Akufo-Addo government is reviewing the viability of the plant as it said the plant cannot continue to produce water and sell at a loss.

Terminating contact to cost over $126 million

Mr. Ofori has advised against any move to terminate the contract, as stated by the Public Utility Workers Union.

He said the termination of the contract would “cost Ghana dearly” and even more than the $126 million cost of the plant.

“You have private investors involved in this and there was a lot of money that was borrowed for this project… I can’t give you an exact figure, but it will cost more than $126 million to terminate such a project,” he warned.

We’re in talks with gov’t on our future

Meanwhile, the GWCL has indicated that it is in talks with government to decide on the way forward.

The Chief Executive Officer of GWCL who made this revelation on Eyewitness News , Clifford Braimah said: “Government is working on it. We have series of meetings, series of interactions and then we are getting into the conclusion stages so we need some time to finalise whatever we are doing.”

“It is a project for the Republic of Ghana. It is a PPP project between the government of Ghana and the people who promoted the project. It went through Cabinet to Parliament and so it is a national project. If there is going to be anything, we have to go through due process to take any decision.”

Background

In 2011, the Government of Ghana awarded a contract to Befesa Desalination Development Ghana for the establishment of the sea water treatment plant to produce clean water, which will be channeled into the pipelines of GWCL.

Messrs Befesa Limited, an engineering firm, was contracted by the government to build the desalination plant, operate to defray its cost, and hand over to the GWCL after 25 years.

The project was executed by Abengoa, a Spanish company, and Sojitz Corporation, Japan’s largest importer of rare earth metals.

The two hold a 94% equity in the project. The plant was designed, constructed and is being operated by Befesa Desalination Developments Ghana, a joint venture of Abengoa Water Investments Ghana, Daye Water Investment (Ghana), and their local partner Hydrocol.

By: Delali Adogla-Bessa/citifmonline.com/Ghana