Teshie Desalination Plant Going Through Contract Renegotiation

The Teshie desalination plant has been shut down to allow for the renegotiation of the contract which is said to be costing government GHc 6 million monthly.

“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.

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.