- Breaking: Ghana, GWCL Hit With US$235m Liability in Teshie Desalination Arbitration
The Government of Ghana and Ghana Water Company Limited have been found liable in two international arbitration proceedings arising from the termination of the water purchase agreement governing the Teshie-Nungua desalination plant.
A tribunal constituted under the International Chamber of Commerce has ordered Ghana Water Company Limited (GWCL) to pay US$235 million to Befesa Desalination Developments Ghana, according to disclosures by Cox Infrastructure Group, the Spanish company that controls the project.
The two final awards, issued on September 17, 2026, cover termination payments allegedly owed to Befesa under its long-term water purchase agreement with GWCL.
Interest will accrue on the amount from April 1, 2026, until payment is made. GWCL was also ordered to pay most of Befesa’s legal and other arbitration costs.
The Government of Ghana was separately found liable under a sovereign guarantee supporting GWCL’s obligations. This means the state could be required to satisfy the financial awards if the water utility does not pay, although the tribunal stipulated that Befesa cannot recover the same amount twice.
The identities of the arbitrators have not been disclosed. Global Arbitration Review, which first reported the awards, said both cases were heard by the same tribunal.
Cox also disclosed that counterclaims brought against Befesa were substantially dismissed. These included a claim for US$144.5 million.
However, the awards reportedly leave the door open for GWCL to institute a separate arbitration concerning alleged defects or repairs at the plant. This follows a finding that a condition survey covering the facility was not properly conducted.
The parties are said to be engaged in settlement discussions. Those negotiations are proceeding without prejudice to Befesa’s rights to enforce the arbitral awards.
The dispute relates to the Teshie-Nungua desalination plant on the eastern coast of Accra.
Befesa, then a subsidiary of Spanish infrastructure group Abengoa, signed a 25-year water purchase agreement with GWCL in 2011.
Under the agreement, GWCL undertook to purchase the plant’s entire output to supply potable water to an estimated 500,000 residents in the Greater Accra Region. The agreement provided for fixed and variable tariffs and included a mechanism for periodically adjusting the price.
Financing for the project was provided by Standard Bank of South Africa, Nedbank and other sponsors. The Multilateral Investment Guarantee Agency, a member of the World Bank Group, also provided political-risk insurance for the investment.
Construction began in 2012, with the plant becoming operational in 2015.
The facility has subsequently been shut down on several occasions. GWCL has attributed the shutdowns to longstanding technical and contractual difficulties.
Befesa terminated the water purchase agreement in 2025, citing GWCL’s failure to meet its payment obligations.
The arbitration also involved disagreements over the indexation of tariffs payable under the agreement.
Cox previously alleged that GWCL had unilaterally stopped applying the agreed indexation mechanism and continued paying the original tariff.
Befesa maintained that adjustments should have been calculated using Ghana’s Consumer Price Index, as provided under the agreement.
The company and Standard Bank commenced arbitration proceedings against GWCL and the Government of Ghana in October 2024. They initially sought more than US$355 million in allegedly unpaid amounts under the water purchase agreement and the associated sovereign guarantee.
Cox had also disclosed that the parties were negotiating a possible amendment that would replace Ghana’s Consumer Price Index with the United States Consumer Price Index as the benchmark for future tariff adjustments.
Standard Bank participated as a co-claimant because of its role as a lender to the project.
Befesa was represented by Eversheds Sutherland, while Standard Bank was represented by Hunton Andrews Kurth. Ghana and GWCL were represented by White & Case, with lawyers who subsequently moved to Paul Hastings also participating in the case.
The US$235 million award creates another potentially significant contingent liability for the Government of Ghana and adds to the growing number of international commercial disputes involving state-owned enterprises and sovereign guarantees.
Neither the Government of Ghana nor GWCL had publicly issued a detailed response to the reported awards at the time of publication.
