Monday, 18 December 2017

Teshie Water Plant: Let’s tread cautiously

THE call by the Public Utility Workers’ Union (PUWU) for the termination of the Teshie Desalination Water Plant contract, on the grounds that the current state of the plant renders it unprofitable, may not be an easy option.

A consolidation of all the costs means that Ghana Water Company Limited (GWCL) is buying the water at about GH¢6.5 per cubic meter, and selling at the regulated PURC rate of about GH¢1.5 per cubic meter. This arrangement means that the GWCL is losing about GH¢5 for every cubic meter of water sold from the Teshie Desalination Plant and, certainly, that does not make economic sense.

That notwithstanding, experts have clearly sounded the warning that any move to terminate the contract would have dire consequences. Apart from “costing Ghana dearly” – even more than the $126 million original cost of the plant – it could impact negatively on the nation’s investment drive, given the fact that this is a Public-Private Partnership (PPP) project between the Government of Ghana and the people who promoted the project.

We recall that in 2011, the Government of Ghana awarded the contract to Befesa Desalination Development Ghana for the establishment of the sea water treatment plant to produce clean water, which will be channelled 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 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.

Happily, government set up a committee barely a month ago to review the viability of the Teshie Desalination Plant project. The committee’s recommendations, which are expected pretty soon, will be put before Cabinet for a final decision on the matter.

Much as we agree with the Deputy Minister for Sanitation and Water Resources, Michael Gyato, that “you can’t produce water and sell at a loss”, The Finder subscribes to the school of thought that part of the woes of the plant is a result of the failings in revenue collection by the GWCL. We strongly believe that if the GWCL solves that problem, it wouldn’t have a challenge with the plant.

We, therefore, urge the GWCL to up its game in revenue collection while government renegotiates downwards the GH¢6.5 per cubic meter at which the GWCL buys water from the plant.

The introduction of the desalination plant was to ensure 13 million gallons of water was produced per day, to eliminate rationing and ensure consumers of Teshie and Nungua get quality and affordable water, and a termination of the contract may not be the best way out.

We must tread cautiously.

 

 

 

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