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Business News of Wednesday, 15 May 2019


GPHA must operate its terminal alongside Terminal 3 – MDU

The Maritime and Dockworkers Union (MDU) is asking government to renegotiate the exclusivity clauses in the Deed of Amendment (DoA) of the concession agreement between the Ghana Ports and Harbours Authority (GPHA) and Meridian Port Services (MPS), to allow the former to operate the existing terminal alongside the new Terminal 3.

According to the union, that will be the most tangible solution to the problem of job-losses at the GPHA and other operators in the Tema Port.

“GPHA spent about US$60million to construct Terminal 2 and must be allowed to operate the container business in that terminal without any restrictions to stem the tide of huge revenue losses for the GPHA and other operators, which would then compel GPHA to shed labour in order to survive,” indicated a statement signed by Daniel Owusu-Koranteng, General Secretary of the MDU.

Clause 3.7 of the Deed of Amendment (DoA) as contained in the MPS Concession Agreement states that “during the term [of the agreement], the concessionaire shall have the exclusive right to provide services to any eligible vessel entering the operational area”, where eligible vessel is defined as “any vessel which is a full container vessel or a vessel that is carrying 200 TEUs or more”.

The union argued that the exclusivity clause prevents other port operators from undertaking container business and gives sole monopoly of the port to MPS, hence the loss of jobs and revenue to the state.

“It is noteworthy that container traffic to the Tema Port was about 1,077,066 TEUs in 2018, indicating that the exclusivity clause – in addition to a tax waiver of US$832million – are totally needless and unwarranted.

“It does not promote competition and efficiency among operating terminals; it is for this reason that most countries in the sub-region – such as Togo, Nigeria, Ivory Coast etc. – have two or more terminals operating and competing independently under different companies.”

Aside from that, he said, the exclusivity clause – which requires that all ships carrying 200 or more containers that berths at Tema Port should be worked on by MPS – would deprive the GPHA of 60 percent of its container business, and will cost the port operator about US$70million in revenue losses per annum.

“Maintaining the exclusivity clause in the concession agreement and seeking piecemeal and ad hoc solutions will not address the root cause of the problem…

“Our union will reject any solution to the problem that does not address the foundation of revenue losses and job losses at GPHA and other operators,” the statement read.

According to the MDU, aside from the exclusivity clause, there are other generous provisions in the DoA which allow MPS to set tariffs and also exempt the company from paying port dues in addition to the payment of lower royalties – leading to loss of revenue for GPHA.

When the project becomes operational in June this year in its current form, the MDU projects that container shore-handling revenue earned by GPHA in receipt, storage and delivery will decline by 50 percent.

Also, GPHA’s revenue from royalties and port dues will reduce from 25 percent to 5 percent and 100 percent to 10 percent respectively; while port occupancy revenue to the GPHA will be zero.

“It is important to mention that the port authority (GPHA) being the landlord is entitled to port dues, but the concession agreement of MPS denies GPHA the right to collect port dues.

“If MPS has to receive massive tax waivers worth 80 percent of its investment cost, operate as a monopoly without competition and enjoy exemption from the payment of rent and port dues before it can operate profitably, then it wants to operate Terminal 3 on a ‘zero sum game’ principle whereby its survival should result in the demise of other businesses,” the union said in its statement.

It added: “The MPS Terminal 3 carries with it enormous social, financial and economic problems, and government has to renegotiate the agreement as a matter of urgency.”

Meanwhile, President Nana Akufo-Addo has assured that his administration will renegotiate sections of the concession agreement after a closed-door meeting with leadership of the Maritime and Dockworkers Union (MDU) and Workers Union of the Ghana Ports and Harbours Authority (GPHA) at Jubilee House in Accra on Monday.

Officials of GPHA and MDU will be put in place to discuss how the agreement can be structured to ensure a win-win situation for both developers and the country, represented by the GPHA.

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