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15.09.2005 Business & Finance

Ghana loses millions from port concession

By Statesman

GHANA is losing millions of dollars, and stands to lose more, as a result of the appointment of Ghana Port Services Consortium to own and manage the container terminal currently under construction in the Tema Port, which was not awarded in an open tender process, according to key players at the Tema Port. After several negotiations with the Ghana Ports and Harbour Authority for a review of the concession given to the consortium failed, the Ghana Association of Stevedoring Companies will meet members of the Parliamentary Sub-Committee on Road and Transport in a few weeks to drum home GASCO's contention that the country is the loser in this deal that gives 70% shares to the foreign-owned consortium and 30% to the GPHA.

The country is expected to lose over US$32.3 million a year in revenue as a result of the concession granted to the consortium. In 2004 the estimated revenue generated for container handling amounted to US$32,3m, made up of about 380,000 container units, according to the Port Handbook, 2005 - 2006. A conservative projection of an annual rise in container traffic of 5% implies that revenue accruing to the operators would accordingly increase.

A simple pro-rata revenue sharing based on the current shareholding implies that the consortium would be earning 70% of the revenue from the container terminal less royalties and other deductions such as rent from lease agreements under the present arrangement.

GASCO has also petitioned the Public Procurement Board to investigate the bidding process and the 20-year Build, Operate, and Transfer concession awarded to the consortium. If Parliament cannot meet the demands of GASCO, they will petition the President to help resolve the problem, a member of the association told The Statesman. The Maritime Board had earlier agreed that GASCO has a good case and called on the GPHA to revise the contract with the consortium. “The national interest is at stake if local stevedoring companies are denied business. The port business is strategic to the nation and it can generate much income for the state. Why do you give it to foreigners?” asked Josephine Nkrumah, Executive Secretary of GASCO, in an interview with The Statesman in Tema. “When we go to Parliament and they can't help us, we will petition the President. But we are confident that Parliament can resolve the issue. We all have a collective vested interest in the port operations. Why are we bringing foreign shipping companies to run the stevedoring business.

The excuse that we don't have local expertise to run stevedoring is disingenuous. Certainly, we have qualified personnel who can efficiently man the activities. We can also hire foreign consultants and experts to do what local experts can't do,” Miss Nkrumah contended.

Miss Nkrumah minced no words when calling for transparency and a review of the concession. “Bring back the transaction to the drawing board,” she insisted, “and let us re-examine the issues and determine what is best for the nation and in line with international standards of transparency and best practice.”

Arguing that it is economically suicidal for the GPHA to own 30% of the transaction and invest more in the container terminal project than the consortium, which owns 70% of the shares, Miss Nkrumah pointed out that it was unfortunate that the consortium won the contract without going through any public bidding process. “Ghana is enjoined through the government and its agencies to abide by international competitive bidding, particularly as this contract was of an international dimension. The agreement between the GPHA's port venture with the consortium should have gone through a competitive open tender process.”

Before the consortium was granted the right to operate the container terminal, indigenous stevedoring companies were running the business. Miss Nkrumah said with the GPHA playing the role of a regulator and an operator, it is unfair for the authority to be “a judge, referee, player and to compete with stevedoring companies.” “Whether it is free-for-all or quota system,” she continued, “the operation of the container terminal by the consortium will affect all local stevedoring companies adversely.”

In October, 2003, the Ministry of Roads and Highways announced that the Ghana Port Services Consortium consisting of AP Moeller Terminals, Bathgate Management Limited, Beckett Rankline Partnership, Buoygues Travaux Publics, Mersey Cooks & Habours Company, SDV Ghana Ltd. (Bollore Group) and Sutton Group had won the bid to manage the port. Reports indicate, however, that only AP Moeller Terminals and SDV Ghana Ltd remain in the consortium while the others have left it due to unexpected reasons. The consortium has a 20-year Build, Operate and Transfer concession, extendable by another 15 years on option, to run the container terminal.

In a letter dated August 19, 2004, Ben Owusu-Mensah, Director-General of GPHA, informed GASCO that the authority would be prepared to off-load some of its shares to GASCO if the association so wished. Mr Owusu-Mensah required a draft of GASCO's Shareholder's Agreement for the investment and knowledge of how it would fund its shares with a start-up capital. In the letter, he stated that GPHA was “in a position to arrange 10% of the total shares to GASCO, which will mean the Association will have to make available to the consortium its share of the estimated $81 million on the above cost, which comes to $8.1 million.” In response, GASCO dispatched a letter dated October 21, 2004 stating that it had registered a new company, West Coast Terminals, to take up the 10% investment in Ghana Port Services Consortium. GASCO then requested for detailed information concerning the deal in order to satisfy its potential financiers who demanded for more information. GASCO asked for a copy of the partnership agreement of the consortium, business plan with financial projections, project implementation plan with critical analysis, total project costs and how it is to be financed between equity and loans, structure of the new company and how it is to be managed, GASCO's place (locus) in the consortium and benefits to be expected from its involvement, among others.

Miss Nkrumah said negotiations between the GPHA and GASCO broke down because the appointment of the consortium was published on October 22, 2004 in the Ghanaian Times. “We wrote to Dr Anane, then Sector Minister, and raised some issues that should have been addressed before awarding the contract to the consortium. Dr Anane didn't tackle the issue at all. We appealed to the GPHA to no avail.”

The media has recently published a press statement issued by GASCO in connection with the award of the contract to the consortium but neither the sector ministry nor GPHA have reacted to the much-publicised statement. When the Director-General of the GPHA was reached for comment, he told our reporter that he was traveling outside the country and could not, therefore, immediately grant us an interview. The Ministry of Ports, Harbour and Railways could not be contacted since the Minister was not available.

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