Ghana is facing a potential US$235 million bill over a desalination plant that was originally conceived to ease persistent water shortages in Teshie, Nungua and adjoining communities.
The Teshie-Nungua Desalination Plant, constructed at an estimated cost of US$125 million, has become the centre of a major financial and contractual dispute between the Ghana Water Company Limited (GWCL) and Befesa Desalination Developments Ghana Limited (BDDG), the company behind the facility.
Two final arbitration awards issued on September 17, 2026, have ordered payments totalling about US$235 million to BDDG following the termination of the Water Purchase Agreement (WPA).
Ghana is also exposed through a sovereign guarantee attached to the project, while interest on the award has been accruing since April 1, 2026.
The development has raised questions about the financial structure of the project, the decision to guarantee the agreement, the failure of renegotiation efforts and the circumstances surrounding its eventual termination.
At the heart of the controversy is a contract under which GWCL was required to pay a fixed capacity charge for the desalination facility regardless of whether the plant produced its full contracted volume of water.
A contract built around capacity
The project originated from an unsolicited proposal submitted by Befesa Ghana Limited to GWCL in April 2010 for a plant capable of producing 60,000 cubic metres of water per day.
The project was subsequently structured as a build-own-operate-transfer arrangement, under which the private company would finance, build and operate the facility while GWCL purchased the water. Ownership was expected to pass to the state after 25 years.
However, the financial structure meant that GWCL’s obligations were not limited to paying for the actual volume of water produced.
The utility was also required to pay a capacity charge for the availability of the facility.
The Government of Ghana backed the arrangement with a sovereign guarantee, which Parliament approved in 2012 alongside a US$110 million Water Purchase Agreement and tax and duty exemptions estimated at about US$72.8 million over the life of the project.
That structure became increasingly significant as the plant’s output and the government’s ability to meet its financial obligations came under pressure.
Government support rises
Figures contained in the government’s 2024 Annual Report on Public Private Partnership Projects show that the financial burden had increasingly shifted from GWCL to the state.
In 2024, Befesa invoiced approximately US$16.93 million, including about US$14.94 million in capacity charges and US$1.54 million in variable water charges.
The plant produced an average of 43,009 cubic metres of water per day, compared with its contracted capacity of 60,000 cubic metres.
That meant the plant was operating at about 72 per cent of its contracted capacity while the capacity charge remained payable.
GWCL reportedly paid only about US$800,000 of the US$16.92 million settled in 2024, with the Ministry of Finance providing approximately US$16.12 million.
Government support for the project had risen from US$13.92 million in 2020 to US$16.12 million in 2024.
Over the five-year period from 2020 to 2024, government support totalled approximately US$57.38 million, while about US$9.77 million remained outstanding to Befesa at the end of 2024.
Water shortages return
The financial problems have been compounded by questions over the plant’s operational performance.
The 2024 PPP report recorded frequent power outages affecting the facility, while its electricity bill alone stood at about US$6.98 million for the year.
Befesa also reported the plant as inoperable following heavy rains in May 2024. A subsequent survey identified structural defects and inadequate bracing, while Ghana Water reportedly attributed some of the problems to poor maintenance and neglect.
The plant was eventually shut down in October 2025 amid unresolved contractual and financial issues.
Communities that were expected to benefit from the facility, including Teshie, Nungua, Baatsona, Spintex, Sakumono and parts of La, have since experienced water shortages and rationing.
Emergency interventions, including water tankers and mechanised boreholes, have been used in some areas, while residents have complained about the additional cost of obtaining water privately.
Renegotiation fails
The government had previously recognised the growing pressure created by the arrangement.
Its 2024 PPP report recommended an expedited renegotiation of the Water Purchase Agreement and suggested that government consider acquiring equity in the plant.
The recommendation reflected concerns over the financial pressure the existing arrangement was placing on GWCL.
However, the renegotiation failed to produce a lasting solution.
The government subsequently terminated the Water Purchase Agreement, setting the stage for the arbitration proceedings that have now resulted in the US$235 million awards.
In March 2026, Works and Housing Minister Kenneth Gilbert Adjei said government was close to resolving the dispute and that the President had directed the Works and Housing Minister, Finance Minister and Attorney General to work towards a settlement.
But the arbitration awards have since been issued, although the parties have indicated that negotiations towards an amicable settlement are continuing.
Why is Ghana paying almost twice the plant’s value?
The size of the award has intensified scrutiny of the original agreement.
The government’s 2024 PPP report valued the project at approximately US$125 million, meaning the US$235 million arbitration award is almost twice the reported construction value of the plant.
The award, however, is not simply a reimbursement of the construction cost. It arises from termination payments and other obligations under the Water Purchase Agreement.
Cox Infrastructure Group, which controls 95 per cent of BDDG, has also indicated that the US$235 million represents gross sums recognised within the project’s financial structure and should not automatically be interpreted as US$235 million in net cash that will ultimately go to Cox.
The final financial impact will depend on recovery, the project’s financing structure, third-party rights and accounting treatment.
Ghana’s own counterclaims, including a claim valued at approximately US$144.5 million, were substantially dismissed by the tribunal.
The bigger PPP question
The dispute has now moved beyond the desalination plant itself and into questions about how Ghana structures and manages long-term public-private partnerships.
Parliament approved the sovereign guarantee. Government agencies negotiated and implemented the agreement, GWCL became the purchaser of the water, and the Ministry of Finance subsequently provided substantial financial support.
The Republic is now exposed to the arbitration award through the guarantee.
The case therefore raises questions about whether the financial risks were sufficiently assessed before the agreement was approved, why concerns over the water tariff did not prevent the arrangement from proceeding, and why the renegotiation process ultimately failed.
Befesa initially sought a bulk tariff of US$1.716 per cubic metre, while the Public Utilities Regulatory Commission considered the proposed price uncompetitive and indicated a lower figure of about US$1.37 per cubic metre, subject to verification of actual costs.
The controversy now leaves Ghana with a project that was designed to address a basic public need, a plant that is no longer serving the communities it was intended to supply, and a potentially huge contractual liability.
The central issue is therefore no longer simply how much the desalination plant cost to build.
It is how a US$125 million infrastructure project accumulated a US$235 million arbitration liability, why the contractual relationship broke down, and what lessons Ghana will draw before entering similar public-private partnerships in the future.
