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$300m Rent Waiver Sparks Row @ GPHA

botchway June 13, 2018

From John Bediako, Tema

The Ministerial Review Committee appointed by the government to look into the concession agreement between the Ghana Ports and Harbours Authority (GPHA) and Meridian Ports Service Limited (MPS) has revealed in its final report that Ghana will lose a whopping $300 million as a result of the rent waiver granted the consortium to expand the Tema Port.

The Deed of Amendment (DoA) exempts MPS from the payment of rent on the land on which the current Terminal 3 is being developed, which is the concession area.

The committee, which frowned on a lot of contentious aspects of the agreement, argued that for a Port Authority that is transforming partially into a landlord model, ceding rent on prime port land leased to private operators will be unwise decision.

It went ahead to indicate that the GPHA cannot afford a total waiver of the land leased to MPS for the development of its terminals.

The Ministerial Committee, therefore, calls for a renegotiation of this portion of the DoA to a proposed minimum of $5.00/m2-per annum as rent for the hard land (the unclaimed lands), and a minimum of $1.00/m2-per annum for the reclaimed land.

It stated that the rent should be fixed for the first five years, and thereafter, reviewed upwards by a minimum of 5% every two years.

The committee elaborated that under the DoA, if these rates are applied, it is estimated that the GPHA would cede $300 million over the next 35 years.

Touching further on the Concession Agreement and DoA, the committee minced no words in stating that “without doubt, it remains the most contentious document, with conflicting interpretations on various issues, and that the DoA, as executed, did not reflect the objectives of the GPHA master plan.  In the first place, several, most likely, all, definitions and redefinitions of terms need to be revised and made consistent with the respective timelines, milestones, in the DoA.”

The Daniel Nii Kwartei Titus Glover chaired committee advised the government to relook at the contentious part of the agreement, and, where possible, replace clauses 3.1 with the following, “The Concession is granted from the Agreement Date and shall continue for a period of thirty-five (35) years from the Date of Operation, unless terminated earlier in accordance with the provisions contained in this Agreement (the ‘Term’), during which the concessionaire is authorized to implement the project and the expansion project, subject to, and in accordance with, the provisions of this agreement.”

The GPHA’s position, according to the committee, is merely to extend the existing concession term from 20 years to 35 years, counting from the agreement date of 2004.  On the contrary, the MPS team (represented by MPH-Bollore’ and APMT) is of the view that the DoA grants a distinct 35 years term starting from 2020, when MPS hopes to complete and commence operations on a ‘New Second Berth.’ The MPH position would bring the total term of the concession to, at least, 55 years.
The GPHA, however, finds MPS’ interpretation to be disingenuous and totally unacceptable.
According to the ports authority, the MPS Concession had run for 9 years as at the time the DoA was executed on June 2015, and would have run for close to 16 years by the time the first and second berths are completed and deployed by 2019.

More to follow.

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