Give Teshie Desalination to Kasapreko or Accra Brewery

Ghana has managed to turn a US$125 million desalination plant into a liability of roughly US$235 million.

The Teshie Nungua plant was designed to produce 60,000 cubic metres of potable water daily. That is 60 million litres every day. It is shut, parts of Accra remain water stressed, and Ghana now faces enormous arbitration awards arising from the failed arrangement.

But was desalination really the problem?

Consider the numbers.

One cubic metre is 1,000 litres.

Ghana Water disclosed that it was buying desalinated water at about GH¢6.75 per cubic metre while selling water at about GH¢1.47.

Obviously, that model was unsustainable. You cannot continuously buy at GH¢6.75 and sell at GH¢1.47.

But here is the irony.

Commercial tanker water in Accra typically costs around GH¢90 to GH¢110 per cubic metre. A 5,000 litre tanker can therefore cost roughly GH¢450 to GH¢600, depending on location and supplier.

So consumers facing shortages can pay GH¢90 to GH¢110 for the same 1,000 litres of water that Ghana Water struggled to accommodate at GH¢6.75.

That is roughly 13 to 16 times the desalination purchase cost.

The market for reliable water clearly exists. The business model did not.

Ghana Water Should Have Been the Highway

Why make Ghana Water the commercial buyer in the first place?

A better structure would have separated production, transmission and retail.

The desalination company produces the water. A private commercial operator sells it. Ghana Water provides transmission and distribution infrastructure where necessary and earns a regulated toll for every cubic metre passing through its network.

Imagine a company with the commercial capabilities of Kasapreko or Accra Brewery handling the retail side through a dedicated subsidiary or consortium.

These companies understand distribution, customer segmentation, billing, credit control, collection and route to market.

Start with customers already paying heavily for reliable water: hotels, factories, hospitals, restaurants, estates, offices, construction companies, schools and high consumption households.

If tanker water costs GH¢90 to GH¢110 per cubic metre, there is considerable commercial space between GH¢6.75 and GH¢90.

Could desalinated water have been profitably sold to selected customers at GH¢20, GH¢30 or GH¢40 per cubic metre while Ghana Water collected a transmission charge?

That question should have been commercially tested.

Don't Confuse Social Water With Commercial Water

Government must protect affordable basic water. But that does not require every litre from every source to carry the same tariff.

Keep conventional water within the social tariff structure. Sell more expensive desalinated water initially to customers prepared to pay for guaranteed supply.

Instead, we built a plant, created an economically strained purchasing arrangement, shut the plant and ended up in arbitration.

Now the plant produces nothing.

Consumers still buy expensive tanker water.

And Ghana faces approximately US$235 million in awards.

There is something painfully absurd about rejecting an arrangement involving water at GH¢6.75 per 1,000 litres, only for consumers facing shortages to buy tanker water at GH¢90 to GH¢110 for the same volume.

The Atlantic Ocean did not fail Ghana.

The business model did.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.