- GIDA defends $11.9 million payment to contractor for Pwalugu Dam project.
- Payment was for mobilization, covered by bank guarantee, and not final work.
- Contractor has delivered pre-construction documents and physical works
- Project aims to control flooding from Bagre Dam and has two major components.
The Ghana Irrigation Development Authority (GIDA) has defended the $11.9 million paid to the contractor undertaking the Pwalugu Multipurpose Irrigation Dam project, stating that the payment was for mobilization and not final work.
GIDA explained in a press statement dated May 28, 2024, that the payment formed part of the terms of the contract that required the contractor, Messrs Power Construction Corporation of China (POWERCHINA), to be paid a total sum of $11.9 million as a mobilization fee once the contractor was able to provide “advance payment guarantee from a reputable bank.”
The authority clarified 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 pre-construction documents and some physical works (camp and access roads).”
GIDA insisted that the terms of the contract were holistically followed 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 mobilization 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 a 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 mobilization required) was paid in three tranches.
GIDA explained that the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP) is a multi-purpose dam designed for flood control from spillage from the Bagre Dam in Burkina Faso, and has two major components: a 60MW Hydro-Power Dam and a 50MW Solar Power System, and a gross area of 25,000 Ha Irrigation Infrastructure downstream of the Hydropower Dam.
The authority stated that the contract for the irrigation component was signed on 2nd August 2019 by the Ministry of Food and Agriculture, and that the EPC contract consisted of a detailed feasibility study (engineering designs, social and environmental impact assessment, soil and agronomic studies) and engineering construction (working drawings and setting out of works).
GIDA clarified that the payment of USD 11.9 million was for mobilization as per the contract terms and not for final payment of works done, and that the payment was covered by a bank guarantee with a face value far in excess of the payment, and at no point was the government at risk.
The authority concluded that contrary to claims that no work has been done, the contractor has delivered both pre-construction documents and some physical works (camp and access roads), and assured the general public that no frivolous payments have been made and the USD 11.9 million paid to the contractor was fully covered by a Bank Guarantee valued at USD 60.7 million.
