Ghana Ports Expansion. Three parts progress, Two parts opposition.
Tema port expansion is expected to be completed this year following the award of a build, operate and transfer (BOT) agreement to the Bollore, APM Terminals and Ghana Ports and Harbour Authority (GPHA) consortium, Meridian Ports Services (MPS). It comes on top of systems changes that made a marked difference to efficiency at the port last year. Despite those improvements, bureaucratic challenges and corruption risk remain. The MPS deal has vocal detractors. The Danquah Institute, a local civil society organisation, has been quoted widely in the press warning that the agreement will lead to revenue and job losses; and is threatening legal action against concessionaires and government. Separately, a presidential committee is due to review the 2016 ports expansion contract.
Background
Total throughput for Tema was 14 million metric tons in 2017 and 4 million metric tons between January and March 2018. By some estimates, it accounts for 80% of formal goods trade flow for Ghana. Within the West Africa region, Tema Port’s main peers and rivals include Abidjan (22.5 million tons throughput in 2017), Lagos-Apapa (71.5 million tons throughput in 2018) and Lome (around 20 million tons throughput in 2017). Securing Ghana’s ‘gateway to Africa’ ambition is one reason for reform. There are others. Before innovations were introduced in 2017, an estimated USD100 million per annum was lost via corruption. Major reforms could be split into two themes, automation and expansion.
Automation
Launched in September 2017, the new system allows operators to register with regulators, pay levies such as the Universal Container Runtime, make import declarations and receive permits such as the Customs Classification and Valuation Report (CCVR) online. Shipping lines and their agents can also submit their manifest online before goods arrive, and this is then tracked in real time by GPHA and other regulators.
To summarise, the system, run by West Blue Ghana Limited (acquired by Dubai’s Customs World in 2017) and locally-owned Ghana Community Network Services Limited (GCNET), enables all transactions involving shipping lines, importers, traders and regulators to be done electronically. However, the project has hit a major hurdle. In March 2018, South Korea’s UNI-PASS signed an agreement with the government of Ghana for a USD40million 10-year single window contract to take over the services provided by the existing operators. UNI-PASS was due to begin work in early 2019, however, it has faced allegations of stealing the software system of the current operators, and effectively selling the existing system back to the government, at a significant cost to tax-payers.
The changes to-date have already raised efficiency and reduced opportunities for officials to ‘chop’ illegally. To quote one operator, “forms that we used to spend half a day or more filling now take an hour or two and when authorization is given, it’s instant, whereas we previously used to have to wait for files to be transferred over and things like that”.
Gains notwithstanding, clearing agents still tell us of artificial delays. “It is usually one particular officer holding up the process to extort payment”. And from another, “my drivers are often made to pay just to be allowed to leave the port, even when all the papers are in order”.
Expansion
A contract for the expansion of Tema was awarded to Meridian Ports Services (MPS) consortium – Bollore, APM Terminals and GPHA. The build, operate and transfer (BOT) agreement entails upgrading the port’s capacity from 1 million twenty-foot equivalent units (TEUS) to 3.5 million TEUS, as well as significant capacity enhancing, to allow the port to receive some of the world’s biggest vessels.
The Danquah Institute claims that the agreement will lead to the loss of 72% of Ghana Ports and Harbour Authority (GPHA) earnings and “at least 1400 jobs” in Tema and Takoradi. It has promised to take legal action against all the parties involved unless a review takes place within 60 days i.e. February 2019.
There are other disgruntled elements. GPHA management is understood to have felt excluded from the tender process while a number of local businesses were uprooted by the expansion activity itself. And there have been other disputes:
• A case was brought against MPS, MPH and GPHA for issuing shares without parliamentary approval in 2013 but dismissed by the Supreme Court.
• Kojo Annan, son of the late diplomat Kofi Annan and one of the founders of MPH went to international arbitration of shareholding and dividends. The matter was eventually settled in October 2017.
• The National Executive Council (NEC) of the Maritime and Dockworkers’ Union (MDU) in early 2019 issued criticisms, claiming that the government’s 2015 deal with Meridian Port Services (MPS), did not follow due process.
Outlook
MPS is in a stronger position than other concessionaires that have run into opposition from local stakeholders. For example, the company is heavily entrenched in port operations already (container terminals) and it has survived through sufficient changes of government to inoculate it against allegations of bias towards one administration or the other. Additionally, expansion works are moving apace, with the main new container terminal expected to be inaugurated in June 2019. There are also plans for major land transportation improvements by 2022, which, if realised, will boost Tema’s competitive position, most notably with Abidjan and Lome.
One potential issue could be the shareholding that GPHA has in MPS which is currently - 30% including 15% guaranteed and the rest to come from royalties due to be paid to GPHA. If those royalties aren’t paid, there could be some contention. The issue has already arisen with GPHA contesting some elements of the contract.
As stated, automation has already brought process improvement. Nevertheless, there are delays, for example clearing consignments, and these are expected to continue in the short to medium term. Additionally, periodic power outages continue to take place, resurrecting fears of a return to the prolonged outages of 2014-16.
Originally written Q4 2018