Committee calls for port concession agreement review

Business News of Sunday, 3 March 2019

Source: Graphic.com.gh

2019-03-03

Aerial view of the expansion project ongoing at the Tema Port

The Ministerial Committee set up by the Economic Management Team to review the concession agreement between the government of Ghana (GoG) and the Meridian Port Services (MPS) has made a compelling case to the government not to implement the agreement in its current form.

The committee in its report, a copy of which is available to the Daily Graphic, raised a number of issues including the fact that the concessionaire, MPS, did not even participate in the procurement/bidding process in 2012, when the government through the Ghana Ports and Harbours Authority (GPHA) initiated the procurement process to expand the Tema Port.

According to the report, which was signed by the Secretary to the Committee, Mr George Ekow Mill, the GPHA in line with requirements of the Public Procurement Act, 2003 (Act 663) and in pursuit of transparency and value for money considerations, decided to use the international competitive tender process to procure contractors, financiers and operators for the expansion project.

But the management of MPS has rejected calls for a review of the contract, saying it amounted to, “interference in investments.”

The Chief Executive Officer of MPS, Mr Mohammed Samara, said the people making such demands, “want to disrupt development and progress.”

Vary terms

Having reviewed the concession agreement in detail, including the Deed of Agreement (DoA) and a memorandum of understanding (MoU), among other documentation, the committee wants the government to, as a matter of urgency, conduct a re-valuation of the project and re-work it to give reasonable and fair returns to all parties.

The re-negotiations, the report stated, should cover the shareholder’s agreement, the DoA, financial agreements, tax protocols and the remodelling of the fair financial implications of the project.

“If this is not done, the GPHA/GoG will be unable to service debts, retain staff and sustain the operations and maintenance of the ports of Ghana,” the report said.

Deed of Amendment

The report asserted that following the execution of a MoU, the GPHA engaged the MPS to negotiate the Deed of Amendment (DoA), after which the GPHA gave concessionary considerations to MPS based on the promises and representations the company made during engagements that led to the signing of the MoU.

It said the initial cost of the project was estimated at $1.5 billion, compelling the GPHA to agree to very low and liberal concession fees on stevedoring, port dues and zero concession fees on berth occupancy charge (harbour dues) to ensure the feasibility and actual execution of the project.

However, the committee found out that after the commencement of marine works at the project site, the cost was reduced to $1.1 billion.

The committee also took cognisance of the fact that the MPS had enjoyed charitable tax waivers to the tune of $832 million as of March 2016, a move the public and civil society organisations had described as bad.

Review

Calls for the review have intensified following a concession agreement which grants an exclusivity rights to the developer, MPS, to charge port dues, withhold the payment of dividends to the GPHA, which will now have a diluted share of 15 per cent of proceeds from the port operations, for the next 10 years.

The latest to add its voice to the calls is the Ghana Trades Union Congress (TUC), which wants a review of the concession agreement as well.

Already, a worker retrenchment programme for the GPHA is scheduled for July. The project, expected to be operational by June this year, is a joint venture between MPS and the GPHA.

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