The Ghana Irrigation Development Authority (GIDA) has justified the $12 million payment made to the contractor responsible for the Pwalugu Multipurpose Irrigation Dam project.
In a press release issued on May 28, GIDA explained that the payment was part of the contractual agreement with the contractor, Power Construction Corporation of China (POWERCHINA), which specified a mobilization fee of $11.9 million upon the provision of an “advance payment guarantee from a reputable bank.”
GIDA further clarified that the government faced no risk in approving the payment, stating, “Contrary to claims of no progress, the contractor has submitted preconstruction documents and completed some physical works, including establishing a camp and access roads.”
Members of the Minority on Parliament’s Works and Housing Committee expressed concerns regarding the payment and conducted a visit to the project site last week to assess the progress of the work completed.
Their visit left them disappointed as they discovered that the contractor had reportedly sold materials designated for the project and had deserted the site.
Despite calls from Edward Bawa, the Member of Parliament for Bongo, for the prosecution of all individuals involved in approving the $12 million payment, GIDA stood firm in its stance that, “no frivolous payments have been made and the USD11.9 million paid to the contractor was fully covered by a Bank Guarantee valued at USD60.7 million. All payments made were for specific activities executed under contract”.
GIDA reiterated and clarified that the terms of the contract were fully adhered to after the contractor provided the advance payment guarantee from Stanbic Bank.
“Under the contract, the Government was expected to pay USD 48,570,889.69 million (which constitutes 12% of the total contract sum of USD 404,757,414.06) as mobilisation to the contractor subject to the provision of an advance payment guarantee from a reputable bank.
“Following the receipt of the advance payment guarantee with face value of USD 60,713,612.11 from the contractor’s bankers (Stanbic Bank), an amount of USD 11,949,088.06 (25% of the total advance mobilisation required ) was paid in three tranches.”
