AquaVenture Holdings Limited, Florida, USA, about to purchase majority of Teshie-Nungua Desalination Plant of Abengoa’s subsidiary Befesa Desalination Developments Ghana Limited (BDDG)

AquaVenture Holdings Limited, a water solutions company based in Florida, United States of America, is set to purchase majority shares in the Teshie-Nungua Water Desalination Plant. According to available information, the transaction is structured as the purchase of the entire share capital of Abengoa’s subsidiary that holds a 56% economic interest in Befesa Desalination Developments Ghana Limited (BDDG), the Ghanaian company that owns the plant. According to PRNewswire, which broke the news on Thursday, “The base purchase price for this interest is approximately $26 million, subject to adjustment in accordance with the purchase agreement.” It adds that completion of the purchase is expected to occur by the end of the second quarter of 2018. The Desalination Plant has been shut down for weeks now since an order from government, prompted by claims that the plant was being run at a loss. The main claims are that the Ghana Water Company Limited (GWCL) makes payments of around GHC8 million a month to the investors of the project, but makes a paltry GHC2 million by supplying treated water from the plant. This culminates in losses of up to GHC6 million every month.  AquaVenture Holdings Limited, which calls itself a leader in Water-as-a-Service (“WAAS”) solutions, indicates on its website that it was set up in 2006 and has since been a leader in the water market. In its 2016 annual report, in which it reports rising profits, the company lists that it currently operates ten water treatment facilities in the Caribbean and South America, of which six exclusively provide water to the local government or government-owned utility companies and four serve industrial and commercial customers. “We are a leading provider of water to the Caribbean market, where we are presently the primary supplier to the United States Virgin Islands, St. Maarten and the British Virgin Islands. We also maintain significant plant operations in Trinidad, Curacao and Peru.” The emerging details indicate government is aware of the transaction although Business Day has not been able to secure confirmation from government officials. But according to Doug Brown, Chairman and CEO of AquaVenture Holdings, “We are excited about this project. This will be our first desalination plant in Africa. The acquisition will expand our base of facilities that provide WAAS solutions to our customers. We look forward to working with the project stakeholders in completing the various conditions to closing and becoming a long-term partner to the Government of Ghana for water treatment and services.” Brown is said to have a track record of delivering shareholder value. In December 2016, reported that “When he joined water technology and engineering firm Ionics as chief executive in 2003, the struggling business was trading at $16 a share. … Facts available on the plant are that in 2011, the Government of Ghana awarded a contract to BDDG 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,” said a Citifmonline publication. Other details are that the two hold a 94% equity in the project but BDDG is a joint venture of Abengoa Water Investments Ghana, Daye Water Investment (Ghana), and their local partner Hydrocol. In the details concerning the transaction released by AquaVenture, the company said it was purchasing a majority interest in a desalination plant in Accra that has the capacity to deliver approximately 18.5 million gallons (60,000 m3) per day of potable water to Ghana Water Company Limited (“GWCL”) under a long-term, U.S. dollar denominated water purchase agreement. It said political risk insurance is provided to the project lenders and project equity sponsors by Multilateral Investment Guarantee Agency (MIGA), a division of the World Bank. The facility has been operational since 2015 and, through its customer, supplies water to approximately 500,000 residents of Accra.


Background to “Teshie Desalination Plant still off-line – water rationed” Ghana – Teshie / Nungua

The Public Utility Workers’ Union has expressed concern about the agreement between the Ghana Water Company Limited (GWCL) and Messrs Befessa, for the production of portable water from sea water for supply to Teshie Nungua and its environs in Greater Accra. A statement signed and issued by the General Secretary of PUWU, Mr Michael Adumatta Nyantakyi on Monday said the GWCL faces an imminent collapse as a result of the said agreement and therefore called on government to conduct a thorough investigation into the role played by public officials who negotiated the agreement.


The investigation, PUWU said would help to ascertain whether GWCL and Ghana, as a whole, has not been short changed by the deal. The Union is also calling on the Ministry of Finance, as a matter of urgency, to take appropriate steps to take “this albatross hanging around the neck of the Company.” Below is a copy of the statement from PUWU


In December 2002, the Ghana Water Company Limited (GWCL) signed an agreement with Messrs Befessa to build a desalination plant at Teshie to produce potable water from sea water for sale to GWCL for distribution to residents in the Teshie-Nungua area. This agreement was ratified by a resolution of Parliament. The desalination plant, an investment by a private entity, started operation in February, 2015. Under the agreement, GWCL is required to pay capacity charge of US$ 1.4 million per month to Messrs Befessa. This charge is payable whether the plant is working or not. Again, GWCL is obliged to pay the electricity bills of the desalination plant which stands at an average of GHC3 million per month (for 2017). The owners and operators of the plant, which is currently owned by the private investor, (Messrs Befessa) are not responsible for the payment of the electricity that is used to enable the plant operate. 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. Therefore, for every cubic meter of water purchased and sold, GWCL losses GHC 5.00. In addition, 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 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. In 2015, GWCL paid to Befessa a total of US $1.8 million leaving an outstanding indebtedness of US$13.9 million. In 2016, even though GWCL was making a negative cashflow of about GHc7.2 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 cashflow of an overage of GHc 6.02 million per month. These expenditures by GWCL on the desalination plant under the agreement has left the Company in a precarious position affecting its cash flow operations and expansion works. There is no doubt that this agreement between GWCL and Messrs Befessa is not only obnoxious but also beat common business sense. 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. The Public Utility Workers’ Union (PUWU) is calling on Government to conduct a thorough investigation into the role played by public officials who negotiated this agreement to ascertain whether GWCL and Ghana, as a whole, has not been short changed by this deal. The Union is also calling on the Ministry of Finance, as a matter of urgency, to take appropriate steps to take this albatross hanging around the neck of the Company. In the light of the fact the that this agreement has seriously weakened the capacity of GWCL to deliver on its mandate, PUWU calls on Government, which guaranteed the agreement, 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 so that it can continue to deliver potable water to Ghanaians. The current situation where workers feel this arrangement is like robbing “Peter to pay Paul” must stop ..


Teshie Desalination Plant still off-line – water rationed Ghana – Teshie / Nungua

The Teshie Desalination Plant has been out of operation for the past couple of weeks as a result of some technical challenges. Due to the shutdown, the Ghana Water Company Limited (GWCL) is now rationing water to the people of Teshie and Nungua. 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. 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/