Government Negotiates Lower-Priced Purchase of Teshie Desalination Plant to Avoid $235 Million Arbitration Award

The Government of Ghana is in negotiations with Befesa Desalination Developments Ghana Limited to purchase the Teshie Desalination Plant at a significantly reduced price, in an effort to resolve the long-running dispute surrounding the facility and avoid paying a reported $235 million arbitration award.

The development was disclosed by the Office of the Attorney-General and Ministry of Justice, which indicated that discussions between the government and the company had been ongoing even before the arbitral tribunal delivered its final decision in the dispute involving Befesa Desalination Developments Ghana Limited, Standard Bank of South Africa Limited and the Ghana Water Company Limited.

According to the Attorney-General’s Office, the government is seeking to acquire the desalination facility for an amount that is considerably lower than the financial claims involved in the arbitration process.

The proposed arrangement, if successfully concluded, would give the state full ownership of the Teshie Desalination Plant while helping Ghana avoid additional financial obligations associated with the dispute.

Government seeks to avoid $235 million payment

The negotiations come against the background of a dispute over obligations under the Water Purchase Agreement between the parties involved.

The arbitration process resulted in a substantial financial award estimated at $235 million, creating concerns about the potential financial implications for the Ghanaian state.

Rather than simply settling the dispute through payment of the full amount, the government is pursuing negotiations aimed at securing ownership of the desalination facility at a considerably lower cost.

The Attorney-General’s Office said significant progress had already been made in the negotiations.

The government believes that acquiring the plant could provide a practical solution to the dispute while also ensuring that the facility can continue providing an important water supply service to residents in Accra.

Teshie Desalination Plant expected to return to full operation

One of the key objectives of the proposed acquisition is to restore the Teshie Desalination Plant to full operation.

The facility plays an important role in supplying potable water to communities in the eastern parts of Accra. According to the government, the plant serves a population of approximately one million people.

The proposed purchase would therefore not only address the financial and legal dispute but could also help strengthen water supply in areas that depend on the facility.

The Attorney-General’s Office said the government wants to conclude the negotiations as quickly as possible to enable the plant to resume full operations.

Background to the Teshie desalination dispute

The Teshie Desalination Plant has been at the centre of a dispute involving Befesa Desalination Developments Ghana Limited, Standard Bank of South Africa Limited and Ghana Water Company Limited.

At the heart of the disagreement are obligations connected to the Water Purchase Agreement, which governs aspects of the relationship between the parties and the supply of desalinated water.

The dispute eventually proceeded to arbitration, where an arbitral tribunal issued its final award.

The size of the financial award has placed the matter under considerable attention because of its potential implications for public finances.

The government’s latest approach appears to be aimed at finding a negotiated solution that addresses the dispute without requiring the state to bear the full financial burden associated with the arbitration.

Government sees acquisition as a cost-saving option

The proposed acquisition could allow the government to resolve two issues at the same time: the financial dispute surrounding the facility and the need to restore the plant’s operations.

Rather than incurring further costs associated with the arbitration and other obligations, the government is seeking to purchase the facility at a price that it says is much lower than the amounts sought through the arbitration proceedings.

The arrangement could also give the government greater control over the operation and future management of the facility.

The Attorney-General’s Office indicated that the objective is to ensure that the state does not incur unnecessary additional expenditure while maintaining the supply of water to communities that depend on the plant.

Importance of the Teshie Desalination Plant to Accra

Water supply remains an important public service issue in the Greater Accra Region, where population growth and increasing demand continue to put pressure on existing water infrastructure.

The Teshie Desalination Plant provides an additional source of potable water by treating seawater through desalination technology.

Its continued operation is therefore considered important to communities in the eastern parts of Accra.

The government estimates that approximately one million residents could benefit from the continued operation of the facility.

Restoring the plant to full capacity could consequently contribute to improving water availability for households and communities within its service area.

Negotiations began before final arbitration award

The Attorney-General’s Office stressed that discussions over a possible purchase of the facility did not begin only after the arbitral tribunal announced its final award.

According to the Office, negotiations between the government and the relevant parties had already been underway before the arbitration process reached its final stage.

This suggests that the government had been exploring an alternative resolution to the dispute while the arbitration proceedings were ongoing.

The current negotiations are therefore part of a broader effort to reach a settlement that protects the state’s financial interests while ensuring that the desalination plant remains available to provide water to residents.

Government hopes for speedy conclusion

The government has expressed its intention to conclude the negotiations within the shortest possible time.

A successful agreement would pave the way for the state to take full ownership of the Teshie Desalination Plant and facilitate its return to full operation.

The Attorney-General’s Office said significant progress had already been made in the discussions, although the final terms and purchase price have not been publicly disclosed.

Until an agreement is formally concluded, the exact financial terms of the proposed acquisition remain subject to negotiation.

What the proposed deal could mean for Ghana

If completed, the proposed purchase could have implications beyond the immediate legal dispute.

For the government, acquiring the plant at a lower price could reduce the financial burden associated with the arbitration dispute. For residents, the return of the facility to full operation could help support water supply in communities across eastern Accra.

The development also highlights the importance of finding negotiated solutions to major infrastructure-related disputes where public funds and essential services are involved.

For now, the government is focused on completing the negotiations with Befesa and securing an arrangement that allows the desalination facility to return to full operation while avoiding what it describes as the need to pay the full $235 million arbitration amount.

The Attorney-General’s Office says discussions have made significant progress, and government hopes to conclude the process soon.

Key Takeaways

• The Government of Ghana is negotiating to purchase the Teshie Desalination Plant from Befesa.
• The proposed purchase price is expected to be much lower than the amounts involved in the $235 million arbitration award.
• The dispute involves Befesa Desalination Developments Ghana Limited, Standard Bank of South Africa Limited and Ghana Water Company Limited.
• The disagreement is connected to obligations under a Water Purchase Agreement.
• Government says the acquisition could help avoid additional costs associated with the dispute.
• The Teshie facility is expected to support water supply for about one million residents in eastern Accra.
• The Attorney-General’s Office says significant progress has been made in negotiations.
• Government wants to conclude the deal quickly and return the plant to full operation.

Source: 3News.com

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