Board of Directors of the Ghana Ports and Harbours Authority have mounted a spirited resistance to the decision by the Mahama-led National Democratic Congress government to grant exclusive right to Lonrho Ports Limited to develop a free port at Atuabo, in the Western Region, to provide “specialised services” for the oil and gas industry.
According to the GPHA Board, they are “being persuaded to endorse a proposal from a foreign institution in a clear violation of our own stated policy when there is no evidence of value for money analysis by a third independent body and also to grant monopoly to a private initiative.”
A GPHA technical report on the project contends that, “the intention to create and develop ports to be administered under the company name ‘Lonrho Ports’…is inconsistent with our current law and maritime development strategy as a country.”
A memorandum from the Board addressed to the Minister for Transport, and signed by the Board Chairman, Alhaji Abubakari Sumani, adds: “We are unable to recall any precedence (sic) in our transport industry, be it aviation or maritime, where such statutory protection has been granted to a private business initiative.”
“As the governing Board of the state ports Authority with the requisite knowledge in the maritime industry, we are unable to appreciate the business need to endorse any form of monopoly for any private operator or developer in the maritime industry. There may be other non-business considerations that are not known to the Board. The particular case of the Lonrho proposal will not only work against the future development of the maritime industry in Ghana but could create room for agitation for smaller facilities elsewhere and that will be the end of the maritime planned growth in the country,” the memo categorically states.
The memo, which was copied to the Office of the President, Minister of Finance, Minister of Trade and Industry and the Attorney-General and Minister of Justice, sums up the position of the GPHA in the following words: “Accordingly on behalf of the Board of Directors of the GPHA, we would not recommend any form of monopoly or unfair special advantage granted to any terminal operator, especially for the yet to be tapped oil and gas industry in the Western Region or elsewhere…”
The over $400m deal, which was said to have been stopped by the late President John Evans Atta Mills, only to receive further impetus with the assumption of office by President John Dramani Mahama, was initially being championed by Alhaji Collins Dauda, as then Minister for Transport, and Hannah Tetteh, then Minister for Trade and Industry. Fronting for Lonrho Ports Limited is Tommy Swanikar, local representative of Swani Motors, who is said to be a close buddy of Hannah Tetteh.
Lonrho signed a Memorandum of Understanding with the Government of Ghana in August 2011 for a feasibility study to be conducted for the Freeport project. Lonrho confirmed to Government in August 2012 that the project was feasible, leading to the signing of a concession agreement.
Highlights of the about 30-page Concession Agreement include the exclusive right granted Lonrho to operate the Freeport, with tax exemption, for 25 years, with further rights for another 25-year extension; provision of 2000 acres of land by the Government of Ghana at the project site, which is strategically located opposite the Jubilee Fields; provision of security, immigration and custom by government; tax free zone for companies operating in the part and for materials imported or in transit; and the development of the only Petroleum and Hyrdocarbons Logistics Port in the Western Region.
Lonrho itself acknowledges that by the agreement reached with the Government of Ghana, the project “has a number of clear competitive advantages over potential rivals…”, citing the “Freeport tax free status; Government support; ideal geographical location for supporting the burgeoning industry in Ghana and further west; it will accommodate the client’s specific requirements in the Master Planning; no tidal restrictions; Accessible 24 hours a day, 365 days a year.”
According to the Executive Summary of the 28-page Project Teaser (Atuabo Freeport, Ghana Oil & Gas Freeport Complex), developed in November, 2013, the Oil and Gas Freeport Complex will be the sole Oil Services Freeport in the Western region.
“The project will provide the infrastructure for support services for the offshore oil and gas developments in Ghana as well as offer support services to the industry in the wider Gulf of Guinea and West Africa region. It is intended that the project will become an economic centre for the Western Africa’s oil and gas industry, providing local employment and economic stimulus in Ghana,” the document adds.
The range of services to be provided include “but not limited to” logistics supply base, rig repair and shipyard facilities, offshore fabrication yard, spool yard, waste management facilities, airport for fixed and rotatory operations, and accommodation and support services for employees of the port users and tenants.
“The port will also act as the logistics gateway for a number of significant third party oil and gas related infrastructure projects being developed in the Western Region of Ghana,” according to the Project Teaser.
But the GPHA technical report on the project says “the entire proposal from the Lonrho Ports is but an Estate Development Plan intended to acquire land with government support, obtain a Freeport Status for tax exemption for the next 25 years, renewal for another 25 years, restrict all others, including GPHA, from developing similar facilities within the geographical region and take advantage of the ‘huge’ potential for Ghana’s growth and invite terminal operators to invest in the facility after an initial investment of US$400m on basic infrastructure…”
Even though GPHA insists the plan by the NDC government to allow Lonrho Ports to operate a free port “will not be in the supreme interest of our country, either in the short or long term,” mobilisation for the project, which is said to have received Cabinet approval, and now pending submission to Parliament for ratification, is earnestly going on.
What appears to be the only stumbling block is that Lonrho Ports Limited, which is said to be ‘broke’, is finding it difficult to raise the funds required for the project.
Credible sources at the Ministry of Finance have told the New Statesman that Financial Institutions, such as the African Development Bank and Agence Francaise Development, have declined Lonrho`s application for loan facilities for the project. The three principal reasons that accounted for the denial of the loan applications were that the current Legislation in Ghana does not allow private/ free zone ports; Lonrho’s financial track record is not in good standing; and that there is not a clearly defined role for Lonrho in the arrangement they have proposed because they cannot operate as a port authority in Ghana. The company is now counting on the Nigerian based Africa Finance Corporation for support.
In fact, the current financial standing of the company is a source of concern to the GPHA Board, as acknowledged in its memo: “The Board is further of the opinion that it is a wrong presumption that every company will want to work with a Lonrho facility in Ghana in the Western Region, conscious of their recent financial performance in the international market, leading to their eventual buy out by other non-British persons.”
Having failed to raise the finance for the project, Lonrho is said to be asking for a sovereign guarantee from Government to enable the project borrow through an Export Credit Agency, an arrangement GPHA officials say “amounts to GoG borrowing to give the funds to a private company to set up an operation which is already illegal in the Laws of Ghana.”