The Teshie Nungua desalination facility in Ghana, built to alleviate Accra's chronic water shortages, has been shut down, leaving the city to grapple with persistent water scarcity. The plant, which cost approximately $125 million to build, was designed to produce 60,000 cubic metres of potable water daily. However, a pricing arrangement that made little commercial sense led to its closure. Ghana Water Company Limited bought desalinated water from the plant at GH₵6.75 per cubic metre and sold it to consumers at GH₵1.47 per cubic metre, resulting in significant losses.
The flawed pricing arrangement ultimately led to arbitration proceedings, which have increased the project's cost to around $235 million. The facility's shutdown has left Accra's residents to rely on tanker water, which can cost between GH₵90 and GH₵110 per cubic metre. This has created a paradox where households and businesses are paying premium prices for water while the idle plant could have supplied them with 60 million litres daily. The situation highlights the need for a viable solution to address Accra's water crisis.
According to MyJoyOnline, the underlying technology of the desalination plant was not the problem, but rather the business model built around it. The plant's output could have been sold profitably to industrial and commercial customers who are willing to pay for reliable water supply. A proposed solution suggests leasing the plant to a private company with strong distribution and customer-management capabilities, such as Kasapreko or Accra Brewery.
The proposed model involves selling desalinated water to industrial and high-consumption customers, allowing Ghana Water to earn a regulated fee for allowing the water to pass through its transmission and distribution network. This approach could have enabled the plant to operate profitably without disturbing the subsidised tariff that ordinary households currently pay for conventional piped water.
The water crisis in Accra persists, with parts of the city experiencing water stress. The idle plant's 60-million-litre daily capacity remains unused, and residents continue to rely on tanker water at high costs. The situation underscores the need for a viable solution to address the city's water shortages and ensure a reliable water supply.
The arbitration liabilities tied to the failed arrangement, estimated at around $235 million, represent a significant financial burden on the state and taxpayers. A new approach to salvage value from the stranded asset is necessary to prevent further financial losses and ensure that the plant's capacity is utilised effectively.
The proposal to lease the plant to a private company offers a potential solution to the water crisis in Accra. However, it remains to be seen whether the government, Ghana Water, or any private company will take up the proposal. No timeline has been given for when, or whether, the facility might resume operations, nor has any official statement addressed how the arbitration liabilities will be settled.
Key points
- The Teshie Nungua desalination plant's idle capacity could supply 60 million litres of water daily to Accra, easing the city's water crisis.
- A flawed pricing arrangement led to the plant's closure, resulting in arbitration liabilities of around $235 million.
- A proposed solution involves leasing the plant to a private company to sell desalinated water to industrial and commercial customers.
