$400M Lonrho Ports Project Illegal - GPHA Fights Mahama Over Bogus Deal

The decision by the Mahama-led National Democratic Congress government to enter into agreement with Lonrho Ports Limited for the development of a free port in the Western Region, with the exclusive right to provide “specialised services” for the oil and gas industry, is facing a still opposition from the authorities of the Ghana Ports and Harbours Authority, who say the whole deal is an illegality being perpetrated against the nation. GPHA sums up its verdict on the project in clear, simple words: “In our opinion, 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 on basic infrastructure...” On August 16, 2011, the Government of Ghana signed a Memorandum of Understanding with Lonrho Ports, a 100% subsidiary of Lonrho Plc, to carry out a feasibility study for the development of “a new, dedicated” oil services terminal in the Western Region. Even though GPHA insists the plan by the NDC government to allow Lonrho Ports to operate a free port “will not be in the supreme interest of our country, either in the short or long term,” the company is said to have started mobilisation towards the project, located at Atuabo, 20 km west of Axim. The $4000 million deal, which was said to have been stopped by the late President Mills, only to receive further impetus with the assumption of office by President Mahama, was initially being championed by Alhaji Collins Dauda, as then Minister for Transport, and Hannah Tetteh, then Minister for Trade and Industry. Fronting for Lonrho Ports Limited is Tommy Swanikar, local representative of Swani Motors, who is said to be a close buddy of Hannah Tetteh. A GPHA technical report on the project contends that “the intention to create and develop ports to be administered under the company name 'Lonrho Ports'...is inconsistent with our current law and maritime development strategy as a country.” “The proposal further seeks to create an exclusive right to Lonrho Ports to develop oil and gas terminal facilities within the Western Region of Ghana. Unless directed otherwise, GPHA is convinced this is not the strategic objective of government even under a Private-Public-Private Partnership business venture,” the report adds. GPHA is therefore calling on President Mahama to put his feet down to prevent some few people from sacrificing the collective interest of the nation on the altar of pursuing their “narrow and short-sighted agenda.” GPHA says it expects the president to assist “in putting a stop to this illegal transaction,” adding: “ It is transactions such as these that undermine the laws/investment legislation of Ghana and will open the flood gates for other investors to come into Ghana, bribe the Politicians/Ministers and bypass enacted legislation and carry on with their parochial business interests.” One of the major worries of GPHA is that the arrangement to allow Lonrho Ports to operate in the Tax Free Zone, which “means that all goods and services entering into that Port will be deemed not have entered Ghana and therefore will not attract tax as currently prevails in our existing ports.” The GPHA's technical report queries: “If the project is considered financially viable, why seek the status of a Freeport Tax Free status?” In a petition to President Mahama, the Minister for Transport and the Attorney-General, GPHA maintained that apart from the issue of illegality, Lonrho does not have the capacity, financially and sector experience, to undertake such a project, adding: “Despite GPHA`s objections…, Lonrho is about to be given the mandate to build a Private Free Zone Port under the guise of a Public Private Partnership (PPP).” Even though Lonrho is said to have already “gone ahead and informed Financial Institutions such as AfDB and others that they were the preferred bidder in a tender to select a company to build the only O&S service port in Ghana,” GPHA says “The Ministry of Transport will confirm that, there was never any such tender and Lonrho`s claim is false.” On funding for the project, GPHA says Financial Institutions such as the African Development Bank, Agence Francaise Development and others have all declined Lonrho`s application for loan facilities for the project. The three principal reasons that accounted for the denial of the loan applications were that the current Legislation in Ghana does not allow private/ free zone ports; Lonrho’s financial track record is not in good standing; and that there is not a clearly defined role for Lonrho in the arrangement they have proposed because they cannot operate as a port authority in Ghana. Having failed to raise the finance for the project, Lonrho is said to be asking for a sovereign guarantee from GoG to enable the project borrow through an Export Credit Agency. But GPHA says this arrangement “amounts to GoG borrowing to give the funds to a private company to set up an operation which is already illegal in the Laws of Ghana.” Questions that are demanding answers from the Mahama-led government include the following: Why is PNDC Law 160 of 1968 being circumvented? Why is Lonrho being granted the status of a Ports and Harbours Authority to build and operate a Private Free Zone Port when it is clear that GPHA is backed by legislation to develop and build ports in Ghana? If there is the need for a dedicated oil & gas service Port, why isn`t the Government supporting GPHA to lead this development? If Lonrho has an exclusivity to build and provide the mentioned services, why is Takoradi Port being expanded under the CDB and KBC loan to provide same? If Lonrho has an exclusivity to build the only oil and gas service hub/port to provide storage facilities, why is BOST going to receive funding under the CDB loan to assist it with its plans to build its Western Services Terminal? Does Ghana have the capacity to provide security for private ports in the light of similar ports being used as transit ports for drug trafficking? The principal reasons advanced in support of the project are the efficient vessel turn times in the Takoradi Port, increasing congestion on transport links, lack of open development land around and lack of international standard port facilities. But, GPHA finds the reasons bogus, and says “it is regrettable that Lonrho Ports seek to justify their project proposal by making unprofessional and inaccurate submissions. Takoradi Port has been in existence since 1928 and currently has the potential to expand to provide 150 hectares of land for maritime operation at the first instance. There is no competing births, deep draft berths or sufficient operational yards in Takoradi Port. Therefore, the issue of turn round time and congestion does not exist.”