Explained: Ghana’s water plant deal that produced a $235m judgment debt instead of water for 500,000 people

Fifteen years after Ghana signed a deal to turn seawater into drinking water for Teshie and Nungua, the plant is idle, residents are buying water from tankers, and an international tribunal has ordered the state to pay $235 million to the plant’s Spanish owners. That is nearly twice the $126 million the plant cost to build. A plant built for the tail end of the network The Teshie-Nungua desalination plant was designed to produce 60,000 cubic metres of water a day for about 500,000 people in Teshie, Nungua and neighbouring communities that had long suffered from poor supply.

Its service area stretched across Teshie, Nungua, Spintex, Baatsona and Sakumono. When the contract was signed in 2011, the Minister for Water Resources, Works and Housing explained that Teshie and Nungua suffered because they sat at the tail end of Ghana Water’s distribution network. He argued that desalination was the best option given how close the communities were to the sea and how much more efficient the technology had become.

An unsolicited offer The project began with a proposal nobody had asked for. After an earlier contract with Aqualyng Ghana Limited was abrogated for non-performance, Ghana Water received an unsolicited proposal from Befesa Ghana Limited on 29 April 2010, and its board approved the signing on 25 August 2010. The minister, Alban Sumana Kingsford Bagbin, now Speaker of Parliament, signed the contract on 25 February 2011.

At the ceremony, Goosie Tanoh spoke as Befesa’s legal advisor and consultant. He announced that the company would spend $500,000 on a dedicated power line to be owned by the Electricity Company of Ghana, pay for a 1.5 km pipeline linking the plant to the Ghana Water grid, and deliver the first trial water in August 2012. Construction started in November 2012, and President John Mahama commissioned the plant in April 2015, two years and eight months after the promised first water.

Parliament’s approval and its warnings The Ministry of Finance issued a Letter of Comfort on 3 October 2011, and the parties signed an addendum on 20 February 2012. The deal went to Parliament on 13 March 2012 and returned two days later in a joint report of the Finance and Works and Housing Committees, signed by James Klutse Avedzi and Simon Edem Asimah. The committees recommended a $110 million Water Purchase Agreement, a government guarantee assuri…