Ghana’s US$235 million arbitration liability over the Teshie-Nungua Desalination Plant has its roots in a water purchase agreement signed more than 15 years ago, with successive administrations facing different stages of the project’s financial and operational challenges.
Two final International Chamber of Commerce (ICC) arbitration awards issued on September 17, 2026 ordered Ghana Water Limited to pay approximately US$235 million, net of taxes, to Befesa Desalination Developments Ghana Limited over the termination of the Water Purchase Agreement.
The Republic of Ghana has also been found liable under the state guarantee attached to the project, while interest on the award runs from April 1, 2026 until payment. The tribunal also substantially rejected Ghana Water’s counterclaims, including a US$144.5 million claim, and ordered the utility to contribute towards the project company’s legal costs.
The plant, which was designed to produce 60,000 cubic metres of water daily, was commissioned in 2015 and was intended to supplement water supply to Teshie, Nungua, Spintex, Baatsona and Sakumono.
It has, however, remained out of operation since October 2025 after Ghana Water shut it down amid unresolved contractual and maintenance issues.
A deal that began in 2010
The origins of the dispute can be traced to April 2010, when Befesa Desalination Development Ghana Limited submitted an unsolicited proposal to Ghana Water Company Limited for the construction of a desalination facility.
The proposal led to the approval of the project agreement by the Ghana Water board in August 2010, followed by the signing of the Water Purchase Agreement on February 25, 2011.
At the time, Kweku Botwe was Acting Managing Director of Ghana Water, while Alban Bagbin was Minister for Water Resources, Works and Housing.
The arrangement was structured as a long-term build-own-operate-transfer project under which the private developer would construct and operate the facility while Ghana Water purchased the treated water.
The government subsequently backed the arrangement with a state guarantee, exposing the Republic to obligations arising from the project.
The financial challenge
The central issue that later emerged was the cost of purchasing desalinated water compared with the revenue Ghana Water could generate from selling it to consumers.
Reports on the dispute indicate that Ghana Water faced a significant mismatch between the cost of procuring water from the plant and the approved tariff at which it could sell the water.
The resulting financial pressure contributed to the difficulties surrounding the agreement and eventually became part of the wider dispute between the utility and the project company.
The plant was shut down in 2018 as government sought to renegotiate the arrangement before operations later resumed.
That period raised questions about whether the underlying commercial structure could be sustained over the life of the agreement.
A problem inherited by successive governments
The financial and operational difficulties did not end with the change of government in 2017.
Successive administrations inherited the agreement and attempted, at different stages, to address the challenges associated with it.
A 2024 government PPP report reportedly recommended an expedited renegotiation of the Water Purchase Agreement and consideration of government acquiring an equity stake in the project.
The recommendation highlighted the extent to which the existing arrangement had become a financial concern for Ghana Water.
The key question now is why those proposed restructuring options did not result in a lasting resolution before the relationship between the parties deteriorated further.
The final breakdown
The situation reached a decisive point in October 2025 when Ghana Water shut down the plant amid unresolved contractual and maintenance concerns.
The Water Purchase Agreement was subsequently terminated, setting the stage for international arbitration.
In February 2026, President John Mahama directed the Finance Minister, the Attorney-General and Ghana Water to engage the shareholders of the project in an effort to resolve the dispute and facilitate the possible return of the plant to service.
In March, Works and Housing Minister Kenneth Gilbert Adjei also indicated that government was working towards a resolution.
Those efforts, however, did not prevent the arbitration process from reaching its conclusion.
What the arbitration decided
The two final awards issued on September 17 have now placed a US$235 million obligation on Ghana Water.
The amount represents termination payments under the Water Purchase Agreement, with interest accruing from April 1, 2026.
The tribunal substantially rejected Ghana Water’s counterclaims, including the US$144.5 million claim, while also directing the utility to contribute towards the project company’s legal costs.
Because the project was backed by a state guarantee, the Republic of Ghana has also been found liable for the awarded sums.
The project company, however, cannot recover the same amounts twice from Ghana Water and the Republic.
The questions now facing Ghana
The award shifts the debate from who originally signed the desalination agreement to how successive administrations managed the problems that emerged from it.
Questions remain about the original financial assumptions behind the agreement, the government’s state guarantee, the repeated attempts at renegotiation, the decision to shut down and terminate the contract, and the negotiations that followed the change in administration.
There are also questions surrounding Ghana Water’s US$144.5 million counterclaim and why most of the claim was rejected by the tribunal.
With the plant still out of service and the state facing a US$235 million award plus accruing interest, the issue has become both a contractual dispute and a major public-finance concern.
Cox, which owns 95 per cent of Befesa Desalination Developments Ghana Limited, has indicated that discussions between the parties toward an amicable solution remain open.
The case therefore leaves Ghana with two immediate challenges: managing the financial consequences of the arbitration award and determining what future, if any, the Teshie-Nungua desalination facility has within the country’s water-supply system.
