The Ghanaian government has begun negotiations with Befesa Desalination Developments Ghana Ltd to purchase the Teshie Desalination Plant. This development comes after an international arbitration tribunal awarded Befesa US$235 million in a dispute over the plant's operation. According to the Office of the Attorney-General and Minister of Justice, discussions for the acquisition started before the arbitral proceedings concluded. The government aims to acquire the facility to ensure full ownership and maintain water supply to about one million residents in eastern Accra.
The arbitration case, ICC Case No. 29029/CPB, was initiated by Befesa and Standard Bank of South Africa Limited against Ghana Water on October 23, 2024. The dispute arose from the failure of the then New Patriotic Party (NPP) government and Ghana Water to pay for water produced and supplied by the plant to Teshie and surrounding communities over several years. Befesa terminated the Water Purchase Agreement (WPA) and sued for compensation for loss of profit. The arbitration addressed claims arising from the termination of the WPA and issues concerning the plant's condition, maintenance, and handover.
A separate arbitration case, ICC Case No. 29030/CPB, was brought by Befesa against the Republic of Ghana under the State Guarantee. The tribunal's final award in that case substantially followed the decision in ICC Case No. 29029/CPB, holding Ghana liable for the obligations of Ghana Water. The tribunal found that Befesa had validly terminated the WPA and that Ghana Water was liable for the contractual Termination Payments resulting from the termination.
The claimants presented two principal monetary claims: approximately US$402 million in alleged unpaid charges and US$235 million in contractual Termination Payments. The tribunal ruled that the two claims could not be recovered cumulatively, dismissing Claim 1 in its entirety. The tribunal awarded Befesa and Standard Bank US$235 million, net of taxes, as the Termination Payment, including pre-award interest calculated up to March 31, 2026.
The award also provided for continuing interest from April 1, 2026, on the Debt Due component of the Termination Payments. Notably, the tribunal reduced the amount originally sought by the claimants, with the US$235 million award representing 58.4 per cent of the monetary claim. The claimants were awarded 58.4 per cent of their reasonable defence and representation costs, reflecting their proportion of success on the monetary claims.
Despite the arbitral award, the government remains optimistic about concluding negotiations with Befesa to acquire the Teshie Desalination Plant for an amount substantially below the US$235 million award. The government believes purchasing the facility will enable the state to take full ownership of the plant while avoiding additional costs. The negotiations are expected to conclude within the shortest possible time to enable the plant to return to full operation.
The acquisition of the Teshie Desalination Plant will ensure a stable water supply to approximately one million residents in eastern Accra. The government's efforts to resolve the dispute and acquire the plant demonstrate its commitment to providing essential services to its citizens. The outcome of the negotiations will be crucial in determining the future operation of the plant and the impact on the local community.
Key points
- The Ghanaian government is negotiating to buy the Teshie Desalination Plant for less than the US$235 million arbitration award.
- The arbitration award was made in favor of Befesa Desalination Developments Ghana Ltd after Ghana Water failed to pay for water supplied by the plant.
- The acquisition of the plant will ensure a stable water supply to approximately one million residents in eastern Accra.
