MANAGEMENT CONTRACT
PRIVATE SECTOR PARTICIPATION IN GHANA
Besides general decentralisation of responsibilities within the water administration, the introduction of private sector participation (PSP) in the water sector was another long term goal of the WSRP.
In 1995, a stakeholder meeting was held to discuss eight different options for PSP including management contracts, concession and service contracts in different combinations. At that time an agreement was reached to adopt the lease. However as a result of changes in the international investment climate which did not favour private investments within utility services, government finally endorsed the management contract arrangement as the preferred option.
THE URBAN WATER PROJECT
The management contract is being implemented within the framework of the urban water project. The World Bank has provided a grant of US$103 million to supplement US$5 million from the Nordic Development Fund and US$12 million from the Republic of Ghana to support the Urban Water Project. In addition the Royal Kingdom of the Netherlands has provided US$13million in support of the project bringing the total amount of financing to U$133 million.
OBJECTIVES OF THE URBAN WATER PROJECT
The main objectives of the Urban Water Project are:
COMPONENTS OF THE URBAN WATER PROJECT
The Urban Water Project comprises four components:
System Expansion and Rehabilitation.
This component is to support:
Public-Private Partnership Development.
This component supports the payment to the operator under the Management Contract as well as payment to Technical and Financial Auditors to measure the Operator’s performance.
Capacity Building and Project Management
.
This component mainly includes training of seconded staff and technical assistance. Also included under this component are allocations for training at GWCL’s headquarters, vehicles, office equipment, support for the Project Management Unit and the PURC as well as provision for environmental safeguards.
Severance Programme.
This component was designed to finance the severance programme undertaken by Ghana Water Company Limited.
MANAGEMENT CONTRACT IN GHANA
In December 2004, the Government of Ghana, through the Ministry of Works and Housing, invited interested firms to submit their bids on a five year management contract which included operation and maintenance of 80 urban water systems located throughout the country.
In 2005 the bidding process was completed and on behalf of the Republic of Ghana, GWCL signed a Management Contract, on 22 November 2005, with Vitens Rand Water Services BV of Netherlands, a consortium of Vitens International BV of the Royal Netherlands and Rand Water Services Pty of South Africa.
The commencement date of the management contract which will last for 5 years was 6th June 2006. Under the Management Contract, Vitens Rand Water Services BV, through its subsidiary, Aqua Vitens Rand Limited, is managing and operating the urban water systems to targets set in the Management Contract and is being paid a fixed fee for meeting the targets.
The overall objective of the Management Contract is to restore GWCL to a sound financial footing and make a significant improvement in the commercial operations of the company.
PRINCIPAL OBLIGATIONS AND RESPONSIBILITIES OF THE OPERATOR
The Operator has exclusive right and obligation to provide the services in the Service Area on an exclusive basis during the Management Contract period.
The Operator is entitled to:
The Operator’s responsibility covers the following:
Technical Services
Commercial Services
Administrative and Financial Services.