By Iddi Yire, GNA
Accra, Sept. 23, GNA – The Government is negotiating with Befesa Desalination Developments Ghana Ltd to purchase the Teshie Desalination Plant at a price much lower than the amount sought in arbitration.
The negotiations began before the arbitral proceedings concluded and before the final award was rendered.
A statement issued by the Office of the Attorney-General and Minister of Justice said the arbitral tribunal had rendered its Final Award in International Chamber of Commerce (ICC) Case No. 29029/CPB, arising from the Water Purchase Agreement between Ghana Water Company Limited (Ghana Water) and Befesa concerning the Teshie desalination plant in Accra.
It said the purchase would ensure that the state fully owned the plant and did not incur additional costs beyond what was necessary to guarantee continued water supply to about one million residents in the eastern part of Accra.
The statement said that notwithstanding the award, significant progress had been made in negotiations to purchase the plant and avoid payment of the US$235 million awarded.
The arbitration was brought by Befesa and Standard Bank of South Africa Limited against Ghana Water on October 23, 2024.
It said after many years of operating the desalination plant, the then New Patriotic Party (NPP) Government and Ghana Water failed or neglected to pay for water produced and supplied to Teshie and surrounding areas.
“Befesa therefore had no option than to terminate the WPA and sue for compensation for loss of profit,” it said.
“The Award addresses claims arising from the termination of the WPA, as well as issues concerning the condition, maintenance and handover of the desalination plant.”
The statement said a final award was also rendered by the arbitral tribunal in the parallel arbitration, ICC Case No. 29030/CPB, brought by Befesa against Ghana under the State Guarantee.
It said that award substantially followed and referred to the award in ICC Case No. 29029/CPB and principally held Ghana liable for Ghana Water’s liabilities.
Touching on the Tribunal’s Decision/Monetary Award, the statement said the Tribunal found that Befesa had validly terminated the WPA and that Ghana Water was liable to make the contractual Termination Payments arising from the termination.
It said the Claimants advanced two principal monetary claims in the arbitration.
Under Claim 1, they sought approximately US$402 million in respect of alleged unpaid charges.
Under Claim 2, they sought contractual Termination Payments of approximately US$235 million arising from termination of the WPA.
The statement said the Tribunal held that Claim 1 and Claim 2 could not be recovered cumulatively and that, following termination for Ghana Water’s breach of the WPA, Befesa’s contractual entitlement was to the Termination Payments and it could not additionally recover the unpaid water charges said to have justified the termination.
It said the Tribunal therefore dismissed Claim 1 in its entirety and awarded US$235 million, net of taxes, to the Claimants, Befesa and Standard Bank, as Termination Payment, inclusive of pre-award interest calculated to March 31, 2026.
The statement said in relation to the Debt Due component of the Termination Payments, the Award provided for continuing interest from April 1, 2026.
It said the Award therefore substantially reduced the monetary recovery sought by the Claimants.
The statement said the Tribunal itself recorded that, taking the approximately US$402 million Claim 1 as the appropriate benchmark, the US$235 million awarded represented 58.4 per cent of the monetary claim.
Accordingly, the Tribunal awarded the Claimants reimbursement of 58.4 per cent of their reasonable defence and representation costs, reflecting the proportion of their success on the monetary claims.
The statement said the Government hoped to conclude the negotiations within the shortest possible time so that the plant could return to full operation.
GNA
Edited by Audrey Dekalu