Business News of 2014-07-07

Road Contractors suspend work over of GH¢184m debt

Some 2,000 members belonging to the Progressive Road Contractors Association (PROCA) and the Association of Road Contractors (ASROC) have suspended construction work on all roads across the country due to the government's inability to pay a GH¢184 million debt it owes them.

The strike action according to the first vice-president of PROCA, Mr Hammond Larbi, has become necessary because its members could no longer continue to finance road projects using bank loans procured at high interest rates.

According him, members of the two associations had not received payment for between 18 to 22 months now, a situation, which he explained, was impacting negatively on them.

Meanwhile, the road contractors expect to be paid three months after the execution of a project, and submission of the completion certificate to the Ghana Road Fund.

Speaking to the Daily Graphic, Mr Larbi stated that the road sector was in crisis, and if the government allowed the prevailing condition to continue, many roads would deteriorate as was the case in the 1970s.

"If nothing is done now, the road industry will collapse, and the repercussion will be dire", he stated.

According to him, the roads and construction sector employs about 500,000 labour made up of engineers, surveyors, drivers, labourers, among others.

Non-payment

Members of the two associations, largely local contractors, carry out road maintenance works, including pot hole patching, desilting of drains, reshaping, gravelling and upgrading of existing roads and are paid by the Road Fund. They also build new roads but are paid through the Consolidated Fund.

Others also undertake projects in cocoa growing communities funded by the Ghana Cocoa Board, Mr Larbi stated.

"Our roads are already deteriorating. Pot holes are not being patched, and even roads that used to be motorable are now giving way. We as local contractors are also concerned because we are also Ghanaians", he said.

"The problem did not start with this government because the fuel levy has not been increased for years", Mr Larbi stated.

‘‘However, our attempt to meet with the Minister of Finance, Mr Seth Terkper, to present to him a proposal on the fuel levy has not yielded any results for more than a year now’’, he stated.

He said one of the measures to accrue more funds into the Road Fund was to remove the cedi value, and, instead, introduce a percentage value so that the fuel levy increased as and when petroleum prices were increased, he explained.

Road Fund cash strapped

According to the Ministry, it would need at least GH¢800 million to clear the backlog of roads that needed urgent maintenance.

But while the need remains dire, the Road Fund is only able to carry out maintenance works on only 40 per cent on the existing infrastructure annually. The fund derives its revenue from fuel levy on petrol and diesel, vehicle licensing fees, road user fees, bridge and ferry tolls, and international transit fee for foreign vehicles entering the country.

The fuel levy alone, however, accounts for about 90 per cent of the revenue into the fund.

Large numbers of motorists, according to the Chief Director of the Ministry, Dr Daniel Darku, have converted into vehicles using liquified petroleum gas (LPG).

He said the ministry had proposed to increase the fuel levy and also for a realistic levy on LPG to be paid by motorists using it. Currently, the fuel levy is six pesewas on a litre. It has not been increased since 2005.

Road network

The country currently has a road network of 67,000-km. Its condition mix is 45 per cent good, 25 per cent fair, and 30 per cent poor.