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GWCL’s Finances Under Threat
 
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29-Sep-2015  
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The Public Utility Workers Union (PUWU) has called for a review of the water purchase agreement between the Ghana Water Company Limited (GWCL) and BEFESA Desalination Developments Ghana Limited, explaining that the current agreement was disingenuous to the survival of the water supplier.

In its current state, the union observed that the agreement on the Teshie-Nungua Desalination Water Project disadvantaged the GWCL but enriches BEFESA, the Korean company that constructed the US$110 million project last year.

The GWCL is currently said to be losing some GH˘1.3 million a month in electricity bills under the agreement, which the union said was too unbearable for a company struggling to break even.
The electricity expenses at the Teshie-Nungua Desalination Water Project brings to GH˘11 million the total amount the GWCL expends on electricity every month.

As a result, the Deputy General Secretary of the PUWU, Mr Michael Adumatta Nyantakyi, said the current agreement would not contribute to the financial health of the state-owned water distributor.
He explained that information available to the union indicated that although the GWCL buys the water from BEFESA at US$1.50 (GH˘5.78226) cubic metre (m3), it retails the same water at the Public Utilities Regulation Commission’s (PURC) approved tariff rate of GH˘2.39, equivalent to US$0.59 per m3.

This means that the GWCL loses an average of GH˘3.39 per a m3 of water retailed which helps to complicate the financial difficulties the company currently finds itself in, Mr Nyantakyi said.

Agreement in perspective

The water purchase agreement is based on a 60,000 m3 per day capacity seawater desalination plant, which was completed in 2014.
The project is seen as one of the interventions to help ameliorate the water challenges residents in the capital city face.
The agreement is based on a build, own, operate and transfer (BOOT) arrangement that will run for 25 years.

It was constructed from a US$110 million loan facility that Parliament approved under a Water Purchase Agreement between the GWCL and the BEFESA Desalination Development Ghana Limited to help transform seawater into potable water for Ghanaians.

Impact of agreement
The company is currently battling to break even in its operations, with dozens of corporate and individual consumers unable to pay for water consumed.

Early this year, the Volta Regional office of the GWCL revealed that consumers in the region were indebted to the company to the tune of GH˘11.02 million, thereby making it difficult for the regional operation to function smoothly.

Similarly, the Ashanti Regional office, earlier in the year, disconnected water supply to the Kwame Nkrumah University of Science and Technology (KNUST) and the Kumasi Polytechnic for failing to settle their indebtedness to the water supplier.

The debts caused the mother ministry of the GWCL, the Ministry of Water Resources, Works and Housing, to earlier this year sign a new performance agreement with its staff and management, which mandated the management to recoup arrears or have their salaries reduced by about 20 per cent.

The Deputy General Secretary of the PUWU, which comprises workers in the utility companies, observed that although majority of GWCL’s debts were in the hands of the ministries, departments and agencies, much of them also resulted from “bad contracts,” an example being the one between the company and BEFESA.

Mr Nyantakyi explained that under the current system, no company could operate profitably hence the need for a cancellation or renegotiation of the contract terms.

He, therefore, called for a forensic audit into the agreement and circumstances leading to its passage so as to avoid a repeat in the future.

Electricity bills
Mr Nyantakyi explained that these challenges added to rising electricity bills, which are also having a toll on GWCL’s operations.
He added that a breakdown of the company’s water supply and electricity cost deficits amounted to US$1.52m in February, US$1.5m in March and US$1.6m in April, which he said was disingenuous to the survival of the company.

GH˘2.39, equivalent to US$0.59 per m3.
This means that the GWCL loses an average of GH˘3.39 per a m3 of water retailed which helps to complicate the financial difficulties the company currently finds itself in, Mr Nyantakyi said.

Agreement in perspective
The water purchase agreement is based on a 60,000 m3 per day capacity seawater desalination plant, which was completed in 2014.

The project is seen as one of the interventions to help ameliorate the water challenges residents in the capital city face.
The agreement is based on a build, own, operate and transfer (BOOT) arrangement that will run for 25 years.

It was constructed from a US$110 million loan facility that Parliament approved under a Water Purchase Agreement between the GWCL and the BEFESA Desalination Development Ghana Limited to help transform seawater into potable water for Ghanaians.

Impact of agreement
The company is currently battling to break even in its operations, with dozens of corporate and individual consumers unable to pay for water consumed.

Early this year, the Volta Regional office of the GWCL revealed that consumers in the region were indebted to the company to the tune of GH˘11.02 million, thereby making it difficult for the regional operation to function smoothly.

Similarly, the Ashanti Regional office, earlier in the year, disconnected water supply to the Kwame Nkrumah University of Science and Technology (KNUST) and the Kumasi Polytechnic for failing to settle their indebtedness to the water supplier.

The debts caused the mother ministry of the GWCL, the Ministry of Water Resources, Works and Housing, to earlier this year sign a new performance agreement with its staff and management, which mandated the management to recoup arrears or have their salaries reduced by about 20 per cent.

The Deputy General Secretary of the PUWU, which comprises workers in the utility companies, observed that although majority of GWCL’s debts were in the hands of the ministries, departments and agencies, much of them also resulted from “bad contracts,” an example being the one between the company and BEFESA.

Mr Nyantakyi explained that under the current system, no company could operate profitably hence the need for a cancellation or renegotiation of the contract terms.

He, therefore, called for a forensic audit into the agreement and circumstances leading to its passage so as to avoid a repeat in the future.
 
 
 
Source: Daily Graphic
 
 

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