Business News of 2014-07-19

Parliament approves Atuabo free port project

Parliament on Thursday ratified a commercial agreement between the government of Ghana, Lonrho Ports Ghana Limited and Atuabo free Port Company Limited for the facilitation of the Ghana Oil and Gas Free Port Project.

The project which would be situated at Atuabo in the Western Region is expected to be fully operational in 2016 to meet the logistics and support requirements of Ghana’s Oil and Gas industry and the wider Gulf of Guinea region. It involves the construction of a harbour protected by a rock breakwater to the west and a rock groyne to the east, a dredged approach channel, a turning circle, berth pockets and quays.

The project would deliver 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 includes service facilities to be located in the port along the quays to provide support services to the off-shore oil and gas industry, including rig repair, waste treatment and management, fabrication and supply facilities.

Chairman of the Finance Committee, James Avedzi, who moved the motion for the adoption of the report of the joint committee of finance and transport said, under the terms and conditions of the agreement the project would be a private sector joint venture with government, referred to as “the developer ” totally funded by the private sector with government guarantee.

Highlights of the Concession Agreement he said includes an exclusive right granted Lonrho to operate the Freeport, with tax exemption, for 25 years, with further rights for another 25-year extension; provision of 2000 acres of land by the Government of Ghana at the project site, which is strategically located opposite the Jubilee Fields; provision of security, immigration and custom by government; tax free zone for companies operating in the part and for materials imported or in transit; and the development of the only Petroleum and Hyrdocarbons Logistics Port in the Western Region.

He said “45 percent of the project shall be wholly Ghanaian owned with a 35 percent of initial capital contribution being made by Ghanaian institutions such as SSNIT,GPHA,GNPC,VRA, SIC, to acquire equity in Atuabo free Port Limited. ” He said the government of Ghana shall also be given a” 10 percent stake of the initial share capital of the developer at a per value zero premium. ”

“The remaining 55 percent of the equity will be held by international investors and will include Lonrho Ltd, Africa Finance Corporation and China Habour Engineering Company (CHEC), he added. He said the committee observed that the project is expected to have significant impact on the economy of the Western Region while at the national level, and has the potential to attract more foreign investment into the country.

“It is expected that during the period of construction, there will be a significant amount of materials purchased from within Ghana, apart from the project enhancing business experience, skills training and job opportunities,” he said.

Energy Minister, Emmanuel Kofi Buah, in a contribution argued that though the country has two ports at Takoradi and Tema, these facilities were not built with the oil in mind, and that those supporting offshore operations currently have to struggle for space in the port. The yet-to-be-built Atuabo Free Port, with all the services incorporated in the design, will turn Ghana into an oil and gas hub within the West African sub-region, he stressed.

The minister explained that as Ghana develops and joins the community of oil producing nations, it would be vital to have facilities such as a dedicated port for oil and gas operations, from storage, fabrications, and maintenance work, all at one location.

Mr Kwabena Owusu-Aduomi, ranking member of committee on Roads and Transport, in contribution described the project as a controversial obey as it spans from the capacity of Lonrho to build such a port in view of the status of Lonrho free Port in equatorial Guinea being used a reference port.

He touched on the severe environmental impact the port would have on coastal settlements along the coast and expressed concerns over the absolute and sole right granted Atuabo Free Port. He argued that the Takoradi Port, after the House approved of a loan of £194 m has position itself in supporting the hydro-carbon industry and is currently restructuring and expanding its existing facilities to continue to support its traditional role.

“The committee visited the Takoradi Port and we are impressed about the expansion works to support oil and gas,” he said, adding that, revenue generated accounts for about 60 percent of the ports entire revenue.

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