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Headline$11.9M was paid as mobilisation fee to Chinese contractor - GIDA on...

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$11.9M was paid as mobilisation fee to Chinese contractor – GIDA on Pwalugu Dam project

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The Ghana Irrigation Development Authority (GIDA) has defended the $12 million payment made to the contractor for the Pwalugu Multipurpose Irrigation Dam project.

In a press statement dated May 28, GIDA explained that the payment was part of the contract terms, which required the contractor, Messrs Power Construction Corporation of China (POWERCHINA), to receive a total of $11.9 million as a mobilisation fee upon providing an “advance payment guarantee from a reputable bank.”

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GIDA also explained that the government was at no point, at risk by approving the payment and that “contrary to the claim that no work has been done, the contractor has delivered both preconstruction documents and some physical works (camp and access roads).”

Minority members of Parliament’s Works and Housing Committee have raised concerns over the payment and visited the project site last week to inspect the progress of the work.

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They expressed disappointment, stating that the contractor had sold materials meant for the project and abandoned the site.

The Member of Parliament for Bongo, Edward Bawa, called for the prosecution of all persons involved in the approval of the $12 million payment but GIDA maintained 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.”

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GIDA insisted 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.”

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