Contractors owed GHC1.3bn - Report

Contractors engaged by government for the execution of various projects across the country are owed Ghc1.3 billion as at December 2016, the Parliamentary Select Committee on Works and Housing report has revealed.

“The Ministry’s indebtedness to contractors as at 31st December, 2016 was highlighted as GH¢ 528.4million and US$174million. By converting the dollar figure at a rate of Ghc 4.50 to a dollar, the Ministry of Works and Housing’s indebtedness to contractors will amount to GH¢1.3billion,” the report said.

According to the report, the Committee was informed that due to delay and non-releases of budgetary allocations, delay by the Bank of Ghana in crediting of the Ministry’s account and delay in the issuance of commencement certificates for capital expenditure, the Ministry is saddled with this huge outstanding commitments.

The report further indicates that the Ministry cannot honour its existing financial commitments to contractors even if all the 2017 budget allocation of Ghc108,887,543.00 is committed to settling the indebtedness.

That notwithstanding, the Minister for Works and Housing, Samuel Atta Akyea has said that government remains committed to settling all outstanding arrears and also intends to continue with existing housing and work projects.

Subsequently, the Committee has appealed to the Finance Ministry to come to the aid of the Ministry to enable it settle its indebtedness. Out of the total allocation of Ghc104,376,233.00 for the works-related programmes of the Ministry of Works and Housing, only GH¢ 60,730,606.13 representing 41.82% was released and expended as at 31st December, 2016.

The report also points out that the budgetary allocations that could have helped the Ministry to have successfully carried out its programme in pursuit of its mandate were partly released or not released at all. By last year’s financial performance, capital expenditure took the chunk of the Ministry’s allocation with Ghc 94,782,832.00, as against goods and services with an allocation of Ghc 546,457.00.

The Committee was informed that the situation made the running of the Ministry very challenging. “Though the Committee is aware that releases are mostly contingent upon availability of resources, this annual ritual of non-release of allocated fund after passage of Appropriation Acts is unacceptable and Parliament needs to take decisive position on it.”

While the sector will welcome new projects to the housing development pipeline for instance, some state agencies might experience strain on capacity amid extended delays in payments for completed construction work.

Despite the Minister’s call for increased investment in low-cost housing, improved access to home loans and streamlined procedures for building applications should feed into a stronger performance from Ghana’s construction sector in the near term.

However, delays in payments for work completed, plus lengthy bureaucratic procedures, continue to pose challenges to expediting construction works.