What was conceived as a solution to the chronic water shortages confronting residents of Teshie, Nungua and surrounding communities has now become a US$235 million financial liability for Ghana.
The Teshie-Nungua Desalination Plant, built at an estimated cost of about US$125 million, has produced one of the most expensive consequences of a failed public-private partnership. Two final arbitration awards issued on September 17, 2026, have ordered Ghana Water Company Limited (GWCL) to pay US$235 million to Befesa Desalination Developments Ghana Limited (BDDG), the company behind the plant.
The Republic of Ghana is also liable under the sovereign guarantee attached to the project. Interest on the award has been running since April 1, 2026, and will continue until payment.
The awards follow a long-running dispute over the termination of the Water Purchase Agreement. The case raises fundamental questions about how Ghana negotiated the deal, why the agreement was terminated, whether the financial risks were properly understood before the state guarantee was issued, and why attempts to renegotiate the arrangement failed.
From Water Crisis to Water Purchase Agreement
The origins of the project go back more than a decade. Teshie and Nungua had suffered chronic water shortages for years when Befesa Ghana Limited submitted an unsolicited proposal to GWCL on April 29, 2010, for the construction of a 60,000-cubic-metre-per-day desalination plant.
GWCL subsequently approved the project, leading to the signing of the Water Purchase Agreement under a build-own-operate-transfer arrangement. A private company would finance, construct and operate the plant, while GWCL would purchase the water produced. After 25 years, ownership was expected to transfer to the state.
A critical financial obligation was embedded in the arrangement. GWCL was required to pay a fixed capacity charge for the plant, regardless of whether it was producing its full contracted volume of water. The Government of Ghana backed the agreement with a state guarantee.
Parliament approved the guarantee in 2012, together with a US$110 million Water Purchase Agreement and tax and duty exemptions estimated at about US$72.8 million over the life of the arrangement. The exemptions covered duties on equipment as well as VAT, NHIL, corporate tax and withholding tax concessions.
Warning Signs and Rising Costs
There were warning signs even before the project became operational. Parliamentary consideration of the agreement raised questions about the capacity of the Ghanaian project company and the involvement of its foreign sponsors. There were also concerns about the price of the water.
Befesa initially sought a bulk tariff of US$1.716 per cubic metre. 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 government’s own 2024 Annual Report on Public Private Partnership Projects revealed the financial structure in detail. In 2024, Befesa invoiced approximately US$16.93 million. Of this amount, about US$14.94 million represented capacity charges, while US$1.54 million represented variable water charges.
The plant produced an average of approximately 43,009 cubic metres of water per day against a contracted capacity of 60,000 cubic metres, representing only about 72 percent of the contracted capacity. Yet the capacity charge remained payable.
In 2024, GWCL reportedly paid only about US$800,000 of the US$16.92 million settled that year. The Ministry of Finance paid approximately US$16.12 million. State support to GWCL for the project amounted to approximately US$57.38 million over five years from 2020 to 2024. At the end of 2024, about US$9.77 million was still outstanding to Befesa.
Technical Problems and Failed Renegotiation
The financial dispute was compounded by operational difficulties. The plant faced frequent power outages, with its electricity bill alone reaching approximately US$6.98 million in 2024. In May 2024, Befesa reported the plant as inoperable following heavy rains. A subsequent survey identified structural defects and inadequate bracing. Ghana Water attributed some of the problems to poor maintenance and neglect.
The government’s 2024 PPP report called for an expedited renegotiation of the Water Purchase Agreement and recommended that government consider acquiring equity in the plant. The renegotiation did not produce a lasting solution. The government eventually terminated the Water Purchase Agreement, which became the foundation of the arbitration proceedings.
Arbitration Outcome
According to the latest disclosure by Cox Infrastructure Group, which controls 95 percent of BDDG, the tribunal ordered payments totalling approximately US$235 million, net of taxes, in termination payments under the Water Purchase Agreement. Interest has been accruing from April 1, 2026. BDDG was also awarded part of its legal costs.
Ghana’s counterclaims, including a claim valued at approximately US$144.5 million, were substantially dismissed. The awards are described as final and binding, subject to any challenge mechanisms available under the applicable arbitration laws.
The scale of the award is striking. The government’s 2024 PPP report valued the project at approximately US$125 million. The arbitration award is therefore almost twice the reported construction value of the plant.
Plant Shutdown and Continuing Water Shortages
The plant was shut down in October 2025 amid unresolved contractual and financial issues. Communities including Teshie, Nungua, Baatsona, Spintex, Sakumono and parts of La have subsequently experienced severe water shortages and rationing. Emergency measures, including water tankers and mechanised boreholes, have been deployed in some areas. Residents have complained about the additional cost of buying water privately.
In March 2026, the Minister for Works and Housing, Kenneth Gilbert Adjei, said government was close to resolving the matter and that the President had directed the Works and Housing Minister, the Finance Minister and the Attorney General to work towards a resolution. Negotiations were said to be ongoing at the time. The arbitration awards have now been issued, and the parties say negotiations toward an amicable settlement are still continuing.
The Teshie-Nungua desalination project has become a case study in the risks Ghana assumes when entering long-term infrastructure contracts backed by sovereign guarantees. A project intended to provide water to hundreds of thousands of people has left the Ghanaian taxpayer facing a potential US$235 million liability while the communities it was meant to serve continue to experience water shortages.
