Lonrho clears hurdle to begin Atuabo Port
Officials of the Atuabo Free Port Project say the exclusive clause in their commercial agreement with the government is to allow promoters of the project reap returns on their investment.
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The clause in the agreement grants a sole right for the development of a dedicated oil and gas service infrastructure in the Western Region for a 10-year period.
A Director of the Atuabo Free Port Project, Mr Steven Gray, denied reports that the company would be given the exclusive power to determine whether Ghana had rights to develop any such facility in future, adding that all companies under the Free Zones Board enjoy equal benefits.
Speaking at a media interaction in Accra, Mr Gray said: “The clause in its present form has been reviewed to a 10-year period, from the commercial operation and, it is a requirement from the financiers.”
“The clause is to protect our investment and to ensure that it stands the test of time,” he added.
The US$600 million project, which was initially billed to commence in the second quarter this year, has been held back due to concerns raised by various bodies including the Trades Union Congress -- which kicked against the exclusive right given to Lonrho to build and operate the port for 25 years initially, but this has been reduced to 10 years.
The Ghana Ports and Harbours Authority had also contended that it was the only mandated body to build and operate ports in Ghana, so it was wrong to allow any foreign business entity to undertake such a project.
But Mr Gray said the clause did not prevent the Ghana Ports and Harbours Authority (GPHA) from expanding the Takoradi Port to enable it to handle the growing demand in maritime traffic, contrary to other suggestions.
He stressed that the government had the ability to develop additional facilities, when the Atuabo Free Port was not able to expand to meet industry demands.
“The Tema and Takoradi ports have limitations, hence the need for a dedicated port for oil and gas,” Mr Gray stressed.
Parliament’s clearance
Five parliamentarians filed a suit at a Sekondi High Court questioning aspects of the agreement -- particularly clause seven, which they said barred the existing Takoradi Port from being expanded to take advantage of oil and gas services. The court dismissed the plaintiffs’ application.
Parliament, on July 17 2014, ratified the commercial agreement between the Government of Ghana, Lonrho Ports Ghana Limited and Atuabo Free Port Company Limited, paving the way for the facilitation of the Ghana Oil and Gas Free Port Project.
The project, which begins by the second quarter of 2015, will be situated at Atuabo in the Western Region. It is expected to be fully operational in 2016 to meet the logistical requirements of Ghana’s oil and gas industry and that of the wider Gulf of Guinea region.
Local content
The External Affairs Officer of Lonrho, Ms Philomena Kuzoe, explained that the developers had incorporated local content into the execution of the project.
That, she explained, was to ensure the participation of Ghanaian institutions, in consonance with the government’s policy and the Local Content and Local Participation Regulations approved by Parliament.
“This agreement exceeds the provisions of the regulations in respect of local participation and hence the delivery of viable joint-venture project that benefits not only external investors, but also Ghanaian investors,” she said.
“Clearly, Ghana has an attractive investment climate and we do not believe it falls within this category. It is important to point out that this project will act as a catalyst to create a centre of excellence for the oil and gas industry in the Gulf of Guinea and result in a net inflow of capital to Ghana through additional investment into this sector,” she pointed out.
Ms Kuzoe also hinted that Lonhro was putting in place mitigation measures to control any negative impact the project might have on the residents of Atuabo.
She said measures were being put in place to ensure that appropriate compensation was offered to cushion farmers as well as fishermen and other land owners.
Nature of project
The project involves the construction of an airstrip and a helipad to facilitate aircraft and helicopter transportation, as well as other infrastructure like power generation, boreholes, accommodation, offices, a naval base, hydrocarbon fuel storage area and roads.
Other components include service facilities to be located in the quays along the port to provide support services to the off-shore oil and gas industry, including rig repair, waste treatment and management, fabrication and supply facilities.
Ownership structure
The initiator of the project, Lonrho -- a UK logistics company, has a 35 per cent stake while the government of Ghana has 10 per cent carried interest, followed by a 35 per cent interest to be purchased on commercial basis by Ghanaian institutions being coordinated by the Ministry of Finance.
The remaining 20 per cent is said to be held by what officials of the company call “other institutional investors”.
