Abengoa, operators of the plant signed an agreement with AquaVenture Holdings to transfer 56 percent of its shares in the plant, worth about 26 million dollars.

[contextly_sidebar id=”NrlhZ2s0xgJsEE1Dx93B8bPZuffoPDUV”]The Teshie Desalination Plant was shut down in 2017 for a renegotiation of the contract with government, which is believed to be costing Ghana 6 million cedis monthly.

The plant, which has reverse osmosis technology, commenced operations in 2015.

It has the capacity of producing 60,000 m3/day of water, sufficient for 500,000 residents within the Greater Accra region.

Per the new contract with AquaVenture Holdings, the base price for Abengoa’s interest in BDDG, which is 26 million dollars is subject to some completion adjustments.

The transaction, which is expected to be finalised by the second quarter of 2018, will be effective once conditions precedent are met.

The conditions include the renegotiation of the water purchase agreement with Ghana Water Company Limited (GWCL) or the receipt of required consents from BDDG’s lenders.

Other sales by Abengoa

Abengoa recently announced the sale of 25 % of Atlantica Yield, the Norte III combined cycle in Mexico, its European bioenergy business to Trilantic Europe, as well as its subsidiary Abentel to Ericsson.

It is also planning to offload its participation in the thermosolar plant Shams-1, located in the United Arab Emirates, the Campo Palomas wind Farm in Uruguay, and its stake in Yoigo, among other divestments.

These offloads are reportedly part of the company’s efforts to restructure itself financially.

About AquaVenture Holdings

AquaVenture is a multinational provider of Water-as-a-ServiceTM (‘WAASTM’) solutions that provide customers a reliable and cost-effective source of clean drinking and process water primarily under long-term contracts that minimize capital investment by the customer.

AquaVenture is composed of two operating platforms: Quench, a U.S.-based provider of Point-of-Use, or POU, filtered water systems and related services to approximately 40,000 institutional and commercial customers.

It also operate Seven Seas Water, a multinational provider of desalination and wastewater treatment solutions, providing approximately 8 billion gallons of potable, high purity industrial grade and ultra-pure water per year to governmental, municipal, industrial and hospitality customers.

–

By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post AquaVenture Holdings acquires Teshie desalination plant appeared first on Citi 97.3 FM - Relevant Radio. Always.

GWCL ordered the shutdown of the plant effective January 1, 2018, for a renegotiation of the contractual agreement between the company and the managers of the plant, Messrs Befessa.

[contextly_sidebar id=”BYbjYn8hsyMDpf1etbYrWSAAWBVYIIw3″]Residents of Teshie, Nungua and other surrounding communities, have experienced poor quality and inconsistency in water supply to the area following the shutdown of the desalination plant.

According to them, they receive water only twice each week, which takes place at dawn, making life unbearable for them.

Speaking to Citi News, the Projects and Program Director of Water for Rural Africa Joachim Kumapley said the shutdown has greatly affected the people in the community.

He called for the contract negotiations between the government and the managers of the facility to be accelerated in order for consistent supply of quality water to the affected areas to resume,

“What we want the Ghana Water company and the government to do is that the re-negotiation that they want to do, we want it to be fast-track, because of some of the things because some these things can a lot of time if you know the legal implication of it,” he said.

About the desalination plant

The Accra desalination plant is located at Nungua in the Kpeshie district, and it is the first desalination plant built in Ghana.

It started commercial operation in March 2015 and was officially inaugurated in April 2015. The $125m project has a capacity to desalinate 60,000m³ of sea water daily, providing fresh water to more than 300,000 people in some municipalities of the Greater Accra Region.

It marked a significant step in improving drinking water facilities in the country, which is witnessing rapid population growth.

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 local partner Hydrocol.

Befesa operates and will maintain the plant for 25 years. Construction started in November 2012, creating 400 direct and indirect jobs in the region.

–

By: Farida Yusif/citifmonline.com/Ghana

The post NGO calls on Gov’t to reopen Teshie Desalination plant appeared first on Citi 97.3 FM - Relevant Radio. Always.

“It has been shut down since [January 1, 2018], to enable us go in to renegotiate and whatever the outcome of the renegotiation is, that will be implemented,” the Head of Communications at the Ghana Water Company Limited, Stanley Martey confirmed to Citi News.

[contextly_sidebar id=”NtYX2MaxDy3bqLYM6N3fHD6sP9J3ggr1″]Water will be supplied to the people of Teshie and its environs from the Tema and Accra booster stations during the period.

“Hence, instead of receiving water supply seven days in a week, it is going to be between three and four days in a week,” Mr. Martey noted.

Mr. Martey did not disclose the terms of the negotiations, but he reiterated concerns previously voiced by GWCL with respect to the financial toll brought on by the plant.

He said the plant was “having a negative impact on the finances of the Ghana Water Company Limited. It is infecting our other investments as well, so we are hoping that we will do a renegotiation and soften the contractual agreement so that all parties will be satisfied.

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.

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.

–

By: Caleb Kudah/citifmonline.com/Ghana

The post Teshie desalination plant shut down for contract renegotiation appeared first on Citi 97.3 FM - Relevant Radio. Always.

In an interview on Eyewitness News on Monday, Mr. Ofori said it will not be advisable to terminate the contract as being suggested by the Public Utility Workers Union (PUWU).

contextly_sidebar id=”1HgkZaKRzj55E2voyhYxXLqBVPN6mdmw”]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.

Mr. Ofori further blamed the woes of the plant on what he said was the Ghana Water Company Limited’s (GWCL) failings in revenue collection.

The GWCL is reportedly making GHc 6million 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.

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: Jonas Nyabor/citifmonline.com/Ghana

The post Terminating desalination plant contract will cost us $126m – Operators appeared first on Citi 97.3 FM - Relevant Radio. Always.

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.”

[contextly_sidebar id=”WbKseYrvWxqSkRLRqxM5sjNDCiKsn1iX”]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

The post Poor revenue collection cause of desalination plant woes – Operators appeared first on Citi 97.3 FM - Relevant Radio. Always.

Their demand comes regardless of a caution from operators of the water plant, Hydrocol, that the said termination will cost government about US $ 123 million.

[contextly_sidebar id=”iHz56Ja2MmnFVgRghV2mMU9PgGw2SWVQ”]The Deputy General Secretary of PUWU, Richard Nyaaba, who made the demand on behalf of the Union on Eyewitness News, said their demands had become necessary, given what it describes as the “heavy financial burden” it is places on the GWCL.

“If we do not take care, that plant will run down the Ghana Water Company and it cannot perform its mandate of supplying others with water,” argued Mr. Nyaaba.

Mr. Nyaaba in defending his call for termination, also pointed out that the plant when closed down will only affect residents of Teshie who have been the main beneficiaries of this project and not Ghanaians as a whole.

PUWU’s call came hours after they called for a thorough investigation into the various roles played by public officials who negotiated the agreement for the construction of the plant.

PUWU had argued that the said project had “seriously weakened the capacity of GWCL to deliver on its mandate.”

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.”

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.

Meanwhile, the operators 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.

Poor revenue collection cause of desalination plant woes – Operators

Also speaking on Eyewitness News, the CEO of Hydrocol limited, Henry Ofori, insisted 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.

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.

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.

–
By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post Terminate Teshie Desalination Water Plant contract – PUWU demands appeared first on Citi 97.3 FM - Relevant Radio. Always.

The investigation is to ascertain whether the GWCL and Ghanaians were not short-changed in the deal.

[contextly_sidebar id=”dGa50ezlWZN9dhGOEq9rxzfGgkvpiZ9w”]According to PUWU, the project, which was signed between the Ghana Water Company and an engineering firm; Messrs Befassa has “seriously weakened the capacity of GWCL to deliver on its mandate.”

Explaining the current challenges the company is battling with due to this project, PUWU explained in a statement that “GWCL buys water from the desalination plant at GHC 6.50 per cubic meter, and sells it to customers at the PURC approved tariff of GHC 1.50”, leaving a “GHC 5.00 loss” for the GWCL.

It added that the “GWCL pays the invoice amount in US Dollars even though it sells the water in Ghana cedis, thereby accumulating more losses as a result of exchange differentials.”

Another strange provision in the contract, according to PUWU “is the price indexation which is tied to local inflation although the invoice and payment to the private operator is in the United States Dollars.”

Citing more examples to support its claim, PUWU recalled that “in 2015, GWCL paid to Befassa a total of US $ 1.8 million, leaving an outstanding indebtedness of US$ 13.9 million. In 2016, even though GWCL was making negative cash flow of about GHC 7.2 million a month, the company was compelled to pay Befessa a total of US $ 23.7 million, leaving an outstanding indebtedness of US $ 8.1 million. As at the end of September 2017 , GWCL had paid a total of US$ 12.9 million to Befessa , leaving an outstanding indebtedness of US $ 7.2 million. The company continued to make a net negative cash flow of an average of GHC 6.02 million per month.”

These expenditures according to PUWU, has left GWCL in a “precarious position” affecting its cash flow operations and expansion works.

According to PUWU, “there is no doubt that this agreement between GWCL and Messrs Befessa is not only obnoxious, but also “beats common business sense as it appears to be a case of a giant conspiracy between foreign investors and their local collaborators and some public officials, with political influence, to loot the public entity like GWCL and share the proceeds among themselves under the guise of a private sector investment or private public partnership.”

PUWU has also called on government to “take over the financial commitments and transaction losses suffered by GWCL” in the purchase and sale of water from the desalination plant, to save the company from potential collapse.

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.

What were the issues?

Some industry insiders had told Citi News that there was no need to have established the Teshie Water Desalination plant because around the same time, the Kpong Water Treatment plant was being expanded to supply over 40 million gallons of water to the Accra East Region.

It was estimated that at its peak, the Kpong Plant could produce about 80 million gallons of water per day, and that could take care of consumers in the catchment area. The retrofitting of the Kpong Plant cost the taxpayer about $273 million.

However, a strong case was made for the Teshie Desalination plant with reference to the fact that the demand for the catchment area stood at 160 million gallons of water a day. Therefore, the government gave the project the needed push to see its execution.

Resistance to the project

The Teshie and Nungua areas have had water challenges for years and because of inadequate water volumes, the Ghana Water Company Limited for years undertook water rationing.

The introduction of the Desalination plant was to ensure 13 million gallons of water was produced per day, to eliminate rationing and ensure consumers got quality and affordable water.

But a bigger problem persisted for GWCL, which is the off-taker under the Water Purchasing Agreement between Ghana and Befesa.

A consolidation of all the costs meant that, Ghana Water was buying the water at about GHc 6.5 per cubic meter, and selling at the regulated PURC rate of about GHc 1.5 per cubic meter.

This arrangement meant that the GWCL was losing about GHc 5 for every cubic meter of water sold from the Teshie Desalination Plant.

Citi News’ checks had also indicated that the  GWCL was losing GHc 6 million monthly by operating the Desalination Plant.

The checks showed that the GWCL was making payments of GHc 8 million a month to the financiers of the project, although it made only GHc 2 million by supplying treated water from the plant.

–

By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post Investigate gov’t officials over ‘unprofitable’ desalination plant – PUWU appeared first on Citi 97.3 FM - Relevant Radio. Always.

Due to the shutdown, the Ghana Water Company Limited (GWCL) is now rationing water to the people of Teshie and Nungua.

[contextly_sidebar id=”EGI5MtJ1PihRl2F2EzZ7OTrtZqZDlfJU”]The Public Relations Officer of GWCL, Stanley Martey, who confirmed the developments to Citi News, noted that water is now being supplied on Wednesdays, Saturdays and Sundays from Kpone.

“We have a few challenges with the plant. We are trying to resolve it. But what we are doing now is to supply water to Teshie and Nungua from the Tema area, so we supply them three times a week to ameliorate the situation.  Currently, there is water in Teshie, but it isn’t flowing 24-7 as hitherto it was.”

Despite the rationing, Mr. Martey said the situation was “manageable” but stopped short of giving any details on when the issues with the plant will be resolved.

“I wouldn’t be able to give a definite date, but within the very near future, the situation will be solved,” Mr. Martey said.

Project under review

In April 2015, the $126 million plant was commissioned to process sea water into potable water for consumers in Teshie Nungua and surrounding areas.

It serves 500,000 people with an estimated 13 million gallons or 60,000 cubic meters of water per day.

The viability of the plant has been called into question and a committee was constituted by the Akufo-Addo government to review the Teshie Desalination plant project, which is said to be costing GWCL GHc 6 million a month.

GWCL was making payments of GHc 8 million a month to the financiers of the project, although it makes only about GHc 2 million supplying the treated water from the plant.

The losses incurred could be as high as GHc 9 million, according to the Ghana Water Company Board Chair, Alex Afenyo-Markin.

“…the contention has been every month, we produce at the cost of GHc 11 million, and we generate revenues of GHc 2 million. There is a deficit and it has been so consistently,” he told Citi News in October.

–

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

The post Water to Teshie, Nungua rationed after Desalination Plant shutdown appeared first on Citi 97.3 FM - Relevant Radio. Always.

Speaking to Citi News, the Deputy Minister for Sanitation and Water Resources, Michael Gyato, said it was clear in the government’s mind that “you can’t produce water and sell at a loss.”

[contextly_sidebar id=”okfvYjolAX5LV6By8l0AqSHSuDcvmA9E”]The Ghana Water Company buys water at about GHc 6.5 per cubic metre, but sells at the regulated rate of about GHc 1.5 per cubic meter.

The Ghana Water Company 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.

Mr. Gyato noted that “they [Ghana Water Company] distribute the water, but the cost of the production and revenue they get doesn’t match. So if it is a PPP [Private Public Partnership] agreement or whatever, it doesn’t wash, and that is why we are saying that the whole country should look at it and see whether it is feasible.”

In view of the concerns that have been raised, the Minister noted that, a committee has already been constituted in this regard, and it will come out wit recommendations “pretty soon.”

“We have asked our team to look at it and give us recommendations. We are just waiting for them to bring their recommendations and we’ll bring it before cabinet and then the Cabinet will take a decision,” he said.

In April 2015, the $126 million plant was commissioned to process sea water into potable water for consumers in Teshie Nungua and surrounding areas.

It is estimated that it serves 500,000 people with an estimated 13 million gallons or 60,000 cubic meters of water per day.

In 2011, the Government awarded a contract to Befesa Desalination Development Ghana for the establishment of the treatment plant to produce clean water.

This public-private partnership arrangement will see a company, Abengoa, operate the plant for 25 years, and then transfer its management to GWCL.

–

By: Marie-Franz Forjoe/Delali Adogla-Bessa/citifmonline.com/Ghana

The post Gov’t reviewing viability of Teshie Desalination plant appeared first on Citi 97.3 FM - Relevant Radio. Always.

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.

The plant has the capacity to desalinate 13 million gallons of seawater a day.

More generally, desalination refers to the removal of salts and minerals from a target substance, as in soil desalination, which is an issue for agriculture.

In this case however, saltwater is desalinated to produce water suitable for human consumption. One by-product of desalination is salt.

In April 2015, the Plant was commissioned by Former President John Mahama to process sea water into potable water for consumers in Teshie Nungua and surrounding areas. It is estimated that it serves 500,000 people with an estimated 13 million gallons or 60,000 cubic meters of water.

The water desalination project falls under the Accra East Region of the Ghana Water Company’s operations.

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.

Project cost             

The total cost of the project is known to be $126 million. The project is a Build, Operate, Own and Transfer project spanning a period of 25 years, with a revenue forecast of about $1.3 billion dollars over 25 year period.

This public-private partnership arrangement will see Abengoa operate the plant for 25 years, and then transfer its management to GWCL.

The World Bank’s political risk insurance arm, the Multilateral Investment Guarantee Agency (MIGA), gave an investment guarantee of $179 million dollars to the project. This was to cover the equity investment and shareholder loan of Abengoa and partners, and a non-shareholder loan and interest-rate swap by Standard Bank Group of South Africa.

What are the issues?

Some industry insiders have told Citi News that there was no need to have established the Teshie Water Desalination plant because around the same time, the Kpong Water Treatment plant was being expanded to supply over 40 million gallons of water to the Accra East Region.

It is estimated that at its peak, the Kpong Plant could produce about 80 million gallons of water per day, and that could take care of consumers in the catchment area. The retrofitting of the Kpong Plant cost the taxpayer about $273 million.

However, a strong case was made for the Teshie Desalination plant with reference to the fact that the demand for the catchment area stood at 160 million gallons of water a day. Therefore, the government gave the project the needed push to see its execution.

Resistance to the project

The Teshie and Nungua areas have had water challenges for years and because of inadequate water volumes, the Ghana Water Company Limited for years undertook water rationing.

The introduction of the Desalination plant was to ensure 13 million gallons of water was produced per day, to eliminate rationing and ensure consumers got quality and affordable water.

But a bigger problem persisted for GWCL, which is the off-taker under the Water Purchasing Agreement between Ghana and Befesa.

A consolidation of all the costs meant that, Ghana Water was buying the water at about GHc 6.5 per cubic meter, and selling at the regulated PURC rate of about GHc 1.5 per cubic meter.

This arrangement meant that the GWCL was losing about GHc 5 for every cubic meter of water sold from the Teshie Desalination Plant.

Some of the monthly costs to the Ghana Water Company include an estimated GHc 1.5 million electricity bill.

The GWCL is currently unable to pay the Electricity Company of Ghana, which is also struggling financially.

The other cost element is the capacity charge, and from Citi News’ analysis, the GWCL owes Befesa an amount of about $80 million.

In November 2015, months after the plant started operations, the GWCL revealed to Citi News that it owed Befesa GHc 43m.

Cause for concern

GWCL produces an estimated 190 million gallons of water per day with current demand at 250 million gallons of water per day.

Only 3 of their 89 urban water supply systems are breaking even and making some good money. These three, Barekese, Weija and Kpong, are basically working to subsidize the operations of the others, according to Citi News’ research.

Any Water Purchasing Agreement which burdens the company financially puts a stress on the nation’s water company and may have dire implications.

Possible options for GWCL, Gov’t

The Government of Ghana and the Ghana Water Company have two options out of the many available to them in this situation.

First, they can continue negotiations and reach a sustainable Water Purchasing Agreement with Befesa and their partners, including the World Bank’s MIGA or it can terminate the existing Water Purchasing Agreement and pay-out the debt, the equity or both, based on negotiations.

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By: citifmonline.com/Ghana

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