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General News of Friday, 2 May 2014

Source: The New Statesman

TUC fights Mahama over ‘illegal’ $600m Atuabo port project

The Trades Union Congress has joined the fight against the decision by President John Dramani Mahama and his National Democratic Congress government to grant an exclusive right to a foreign entity, Lonrho Ports Ltd, to develop and operate a free port in the Western Region, in contravention of the laws of the nation, insisting that the project will undermine national sovereignty and security.

The estimated $600m Atuabo Free Port Project was stopped by the late President John Evans Atta Mills when the deal was presented to him, in view of its illegality; only to receive even greater impetus on the assumption of office by President John Dramani Mahama.

The Concession Agreement relating to the project has been approved by President Mahama and his Cabinet, snubbing expert advice from the management and board of the Ghana Ports and Harbours Authority which had mounted a spirited opposition to the proposal. The Agreement is now pending parliamentary approval.

Highlights of the Agreement include the exclusive right granted Lonrho to operate the Freeport, with tax exemption for 25 years, with further rights for another 25-year extension; provision of 2000 acres of land by the Government of Ghana at the project site which is strategically located opposite the Jubilee Fields; provision of security, immigration and customs by government; tax free zone for companies operating in that part and for materials imported or in transit; and the development of the only Petroleum and Hyrdocarbons Logistics Port in the Western Region.

Like the management and board of GPHA and the Maritime and Dockworkers Union, the TUC insists the project is not in the supreme interest of the nation apart from the fact that it violates the maritime laws, policies and strategies of the nation.

Addressing the Workers’ Day Parade at the Independence Square yesterday, Secretary General of the TUC, Kofi Asamoah, maintained: … “This constitutes a blatant violation of the Ghana Ports and Harbours Authority (GPHA) Act 160 of 1986 (PNDCL 160) which gives GPHA the sole authority to plan, build, manage, maintain, operate and control ports.”

Mr. Asamoah drew the attention of President Mahama and his government to the fact that “Placing a port under the control of a private foreign multinational company would undermine national sovereignty and security".

The TUC boss indicated clearly that the exclusivity granted a foreign private entity to develop and operate a free port to service the oil and gas industry is a serious disincentive to the development of the nation’s ports.

“The expansion of the Takoradi Port has a component of an oil and gas service terminal. Therefore, providing exclusivity for the Atuabo Freeport would have the potential of killing the Takoradi Port. This will not help Ghana reap the benefits of the investments in the expansion of the Takoradi Port. We wish to propose that the terminal for the oil and gas services should be part of Ghana’s local content in the oil and gas sector and should be placed under the state-owned GPHA. This will be one way to strengthen GPHA to perform its functions as one of the most important state institutions in the country,” Mr. Asamoah stated.

The New Statesman can report that despite the spirited opposition to the project by all the major stakeholders, President Mahama and his cronies are bent on moving heaven and earth to see the project through, thus raising questions about what they personally stand to gain from the project.

The GPHA Board, then chaired by Alhaji Abubakari Sumani, mounted a vehement resistance to the project, an action which incurred the wrath of the powers that be, leading to his dismissal from office, and subsequent replacement with Samuel Ofosu-Ampofo, a close ally of Alhaji Collins Dauda, Minister for Works, Water Resources and Housing, and Hannah Tetteh, Foreign Minister, who are said to be championing the project.

The Alhaji Sumani-chaired Board, at a meeting on August 22, 2013, concluded that the project was not in the national interest, against the national maritime strategy, and so would not recommend it. The board accordingly sent a memo to the Transport Minister, the President, AG and others, stating its opposition to the whole deal.

The memo stated in part: “As the governing Board of the state ports Authority with the requisite knowledge in the maritime industry, we are unable to appreciate the business need to endorse any form of monopoly for any private operator or developer in the maritime industry. There may be other non-business considerations that are not known to the Board. The particular case of the Lonrho proposal will not only work against the future development of the maritime industry in Ghana, but could create room for agitation for smaller facilities elsewhere and that will be the end of the maritime planned growth in the country.”

“Accordingly, as a state Board, we are concerned we are being persuaded to endorse a proposal from a foreign institution in clear violation of our own stated policy when there is no evidence of value for money analysis by a third independent body and also to grant monopoly to a private initiative. We are unable to recall any precedence (sic) in our transport industry, be it aviation or maritime, where such statutory protection has been granted to a private business initiative.”

Other concerns raised in the memo have been quoted below:

“The Board accordingly advises government against any form of statutory endorsement of private monopoly be it in the maritime or aviation or rail industry. The Board is of the strong view that the burden is on Lonrho as a private business initiative to prove that its business model can withstand fair competition in the maritime, oil and gas industry in Ghana in the coming years. The fact that government, GPHA or other Ghanaian private businesses should or can take shares in the business proposal is no reason for statutory endorsement of private monopoly for whatever period.”

“Exclusivity: In July of 2010, the Government of the NDC under the late President Atta Mills issued a directed that existing agreements at the port should be reviewed to eliminate monopoly and ensure the promotion of fair competition among various operators at the part. (Copy of the letter attached). The objective was to remove any form of monopoly by Meridian Port Services and other port operators in the maritime industry."

“The Board is of the strong opinion and in line with international best practices in the maritime trade, that even if any company, including Lonrho, acquired by concession any GPHA developed land, they will not be granted the sole right to do business, be it oil or gas or other. This will also be in accordance with the stated directive of the July 2010 letter aforementioned issued by this government.”

“The Board wishes to draw attention of government to the loans already executed as a First Phase to develop the Port of Takoradi and its surroundings and would strongly caution government against any act intended to restrict, deny or limit the operations of Takoradi Port more expensive than some other facilities by way of tax reliefs as in the Free Port status. In the unfortunate event of this happening the further development of the Takoradi Port and Tema Port may have to be halted unless the loans are taken onto central government budget. The loans of GPHA are settled from a consolidate account.”

“The Board admits the need to develop the port facilities especially for the oil and gas industry and hence the investments in Takoradi Port are as priority. The Board does not object to other private initiatives in this direction but considers it commercially inappropriate to restrict entry into the business to the total exclusion of a private firm. It will be unfair to all those who had been waiting eagerly for Takoradi port works and have spent resources to study the maritime environment in the Western Region with the view to making proposals for consideration by GPHA and government.

“Accordingly on behalf of the Board of Directors of the GPHA, we would not recommend any form of monopoly or unfair special advantage granted to any terminal operator, especially for the yet to be tapped oil and gas industry in the Western Region or elsewhere...”

In fact, a technical report by GPHA said, “the entire proposal from the Lonrho Ports is but an Estate Development Plan intended to acquire land with government support, obtain a Freeport Status for tax exemption for the next 25 years, renewal for another 25 years, restrict all others, including GPHA, from developing similar facilities within the geographical region and take advantage of the 'huge' potential for Ghana's growth and invite terminal operators to invest in the facility after an initial investment of US$400m, (now reviewed upwards to US$600m) on basic infrastructure...”

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