AquaVenture Holdings Limited, Florida, USA, about to purchase majority of Teshie-Nungua Desalination Plant of Abengoa’s subsidiary Befesa Desalination Developments Ghana Limited (BDDG)
AquaVenture Holdings Limited, a water solutions company based in Florida, United States of America, is set to purchase majority shares in the Teshie-Nungua Water Desalination Plant. According to available information, the transaction is structured as the purchase of the entire share capital of Abengoa’s subsidiary that holds a 56% economic interest in Befesa Desalination Developments Ghana Limited (BDDG), the Ghanaian company that owns the plant. According to PRNewswire, which broke the news on Thursday, “The base purchase price for this interest is approximately $26 million, subject to adjustment in accordance with the purchase agreement.” It adds that completion of the purchase is expected to occur by the end of the second quarter of 2018. The Desalination Plant has been shut down for weeks now since an order from government, prompted by claims that the plant was being run at a loss. The main claims are that the Ghana Water Company Limited (GWCL) makes payments of around GHC8 million a month to the investors of the project, but makes a paltry GHC2 million by supplying treated water from the plant. This culminates in losses of up to GHC6 million every month. AquaVenture Holdings Limited, which calls itself a leader in Water-as-a-Service (“WAAS”) solutions, indicates on its website that it was set up in 2006 and has since been a leader in the water market. In its 2016 annual report, in which it reports rising profits, the company lists that it currently operates ten water treatment facilities in the Caribbean and South America, of which six exclusively provide water to the local government or government-owned utility companies and four serve industrial and commercial customers. “We are a leading provider of water to the Caribbean market, where we are presently the primary supplier to the United States Virgin Islands, St. Maarten and the British Virgin Islands. We also maintain significant plant operations in Trinidad, Curacao and Peru.” The emerging details indicate government is aware of the transaction although Business Day has not been able to secure confirmation from government officials. But according to Doug Brown, Chairman and CEO of AquaVenture Holdings, “We are excited about this project. This will be our first desalination plant in Africa. The acquisition will expand our base of facilities that provide WAAS solutions to our customers. We look forward to working with the project stakeholders in completing the various conditions to closing and becoming a long-term partner to the Government of Ghana for water treatment and services.” Brown is said to have a track record of delivering shareholder value. In December 2016, desalination.biz reported that “When he joined water technology and engineering firm Ionics as chief executive in 2003, the struggling business was trading at $16 a share. … Facts available on the plant are that in 2011, the Government of Ghana awarded a contract to BDDG for the establishment of the sea water treatment plant to produce clean water, which will be channeled into the pipelines of GWCL. Messrs Befesa Limited, an engineering firm, was contracted by the government to build the desalination plant, operate to defray its cost, and hand over to the GWCL after 25 years. “The project was executed by Abengoa, a Spanish company, and Sojitz Corporation, Japan’s largest importer of rare earth metals,” said a Citifmonline publication. Other details are that the two hold a 94% equity in the project but BDDG is a joint venture of Abengoa Water Investments Ghana, Daye Water Investment (Ghana), and their local partner Hydrocol. In the details concerning the transaction released by AquaVenture, the company said it was purchasing a majority interest in a desalination plant in Accra that has the capacity to deliver approximately 18.5 million gallons (60,000 m3) per day of potable water to Ghana Water Company Limited (“GWCL”) under a long-term, U.S. dollar denominated water purchase agreement. It said political risk insurance is provided to the project lenders and project equity sponsors by Multilateral Investment Guarantee Agency (MIGA), a division of the World Bank. The facility has been operational since 2015 and, through its customer, supplies water to approximately 500,000 residents of Accra.