Foreign Affairs Ministry justifies spending GH¢7 million on a GH¢1 million project

The Ministry of Foreign Affairs and Regional Integration has given further explanations as to how a project whose initial cost was GH¢1,435,728.99 was executed for GH¢7,967,886.57.

The contract for the rehabilitation of Adu Lodge Guest House, which is a presidential lodge facility, was awarded to International Development Resources on March 15, 2007.

Appearing before the Public Accounts Committee (PAC) on Friday, January 20, 2023, the Acting Chief Director of the Ministry, Ambassador Ramses Joseph, said the project was revisited in March 2019 and, upon the request of the consultant, was re-valued at GH¢7,967,886.57 for the same contractor to execute.

He had attributed the delay in project execution to the ill health of the contractor.

But the Ministry of Foreign Affairs says the explanation offered by the Acting Director was "inaccurate".

"The Ministry wishes to state for the record that the delay in getting the project completed had been occasioned by a number of factors, including the redesign and delayed release of funds, delayed certification, and delayed payment of those certificates issued to the contractor by AESL.

"As a result of the delay, the contract sum increased in correlation to increased inflation and currency depreciation, impacting adversely on material costs," the Ministry said in a statement on Monday.

The ministry’s statement also gave a detailed account of the project.

The initial scope of work included: refurbishment of Block A; refurbishment of Block B; refurbishment of Block C; external works; electrical installation works; 2 boys' quarters structures; a security gatehouse; a swimming pool; fire detection installation; and an air-conditioning system.

After it was redesigned, the following was included: Construction of a laundry block; construction of a conference block; construction of a kitchen block; construction of a pool house; a generator platform; a water storage tank and platform; borehole drilling and treatment; VOIP intercom and data networking; installation of a fitted kitchen; and close circuit television.

Find the Ministry’s full statement below

REJOINDER: "MINISTRY OF FOREIGN AFFAIRS SPENDS 7.9 MILLION CEDIS ON A 1.4 MILLION CEDIS PROJECT BECAUSE THE CONTRACTOR FELL ILL – CHIEF DIRECTOR"

While noting that the submission was inaccurate, the Ministry takes the opportunity to apprise the public about the extent of work and details of events that led to the delay and increased cost between the years 2007 and 2021.

Adu Lodge is a presidential lodge facility that consists of 3 buildings that were used to host various sizes of high-level delegations with the primary objective of saving the taxpayer's avoidable expenses. This was the function of the Adu Lodge facility for decades until it was closed, originally for rebuilding and later revised for renovation.

The original award to Messrs International Development Resources (IDR) on 15th March 2007 by the Architectural Engineering Services Limited (AESL) was to demolish the originally existing 3 buildings that constituted the Lodge, at the time, and construct a new building of twelve (12) bedroom at a contract sum of Fourteen Billion.

Three Hundred and Fifty-Seven Million, Two Hundred and Eighty-Nine Thousand, Seven Hundred and Seventy old Ghana cedis (14,357,289.77), equivalent to One Million, Four Hundred and Thirty-Five Thousand, Seven Hundred and Twenty-Eight new Ghana Cedis, Ninety-Eight Pesewas (GH01,435.728.98) after the redenomination of the Cedi in July 2007.

The contract sum was, however, revised in October 2011 to an amount of Four Million, Four

Hundred and Thirty-Two Thousand, Five Hundred and Fifty-Eight Ghana Cedis, Seventy pesewas

(GH4,432,558.70). This time, the project had been reviewed to rather renovate the existing facilities and build additional ones for expansion and to create room for other ancillary facilities.

The revised bill of Quantities from AESL covered the under-listed works:

• Refurbishment of Block A

• Refurbishment of Block B

• Refurbishment of Block C

• External works

• Electrical installation works

• 2 Boys Quarters structures

• Security gatehouse

• Swimming pool

• Fire detection installation

• Air-conditioning system

Unfortunately, the project stalled completely from the period 2009 to 2017 mainly due to the inability of the contractor to continue to pre-finance the project as a result of the lack of reimbursement for expenditure already incurred. Indeed, the bank accounts of IDR were garnisheed for its inability to pay back bank loans the company had taken to prefinance the project on schedule.

On her assumption of office in the year 2017, Honourable Shirley Ayorkor Botchwey, the Minister for Foreign Affairs and Regional Integration called for the review of the contract which was later re-awarded to save the country the already invested funds and put the facility to its originally intended use.

The Ministry, therefore, invited Public Works Department (PWD) Prestige to take over the supervision of the project in December 2017, after 6 years of inactivity. This necessitated the need to revisit, ascertain and revise the outstanding works on the project.

PWD Prestige’s assessment revealed that the value of outstanding works from details above was Five Million, Eight Hundred and Seventy-Five Thousand, Three Hundred and Eighteen Ghana Cedis, Ninety-Six pesewas (GH¢5,875,318.96) per the prevailing market prices as of 16th January 2018.

Not long after this, a site meeting was held, and it was decided that there was a need to include other works which did not form part of the initial Bills of Quantities. The Department was, once again, tasked to review the Bill of Quantities on 170 January. 2019 taking into consideration, the outstanding works including the new structures.

The General Summary of the works amounted to Eight Million, Three Hundred and Thirty Thousand, Sixty-Three Cedis, Twenty-Three Pesewas (GH¢8,330,063.23). Newly measured works that were added to the existing project comprised the following:

• Construction of a Laundry block

• Construction of a Conference Block

• Construction of a kitchen block

• Construction of a pool house

• Generator platform

• Water storage tank and platform

• Borehole drilling and treatment VOIP intercom and data networking

• Installation of fitted kitchen

• Close Circuit Television

The Ministry duly obtained the procedural approval of the Public Procurement Authority (PPA) and transmitted same to the PWD. Prestige to enable the revival of the project. It is worth noting that the PPA, while granting the approval, directed that the Fifteen (15) % of the Contingency sum be reduced to Ten (10) %.

This brought about a reduction of the proposed contract sum to Seven Million, Nine Hundred and Sixty-Seven Thousand, Eight Hundred and Eighty-Six Ghana Cedis Fifty-Seven Pesewas (GH¢7,967.886.57) as the new contract sum.

The above-listed and reviewed works were duly completed and handed over to the Ministry in October. 2021. Payment of work done was honoured at various stages until completion with the exception of the retention amount of One Hundred and Fifty-Five Thousand, Three Hundred and Thirty-Eight Ghana Cedis. Ninety-Three pesewas (0E10155,338.93).

Throughout the lifespan of the project, Sixteen Interim Payment Certificates were raised. Five out of the Sixteen were valued and raised by AESL and the remaining 11 by PWD Prestige after taking over the project.

The Ministry wishes to state on record that, the delay in getting the project completed had been occasioned by a number of factors, including the redesign and delayed release of funds, delayed certification, and delayed payment of those certificates issued to the contractor by AESL As a result of the delay, the contract sum increased in correlation to increased inflation and currency depreciation impacting adversely on material cost.

While the Ministry seeks to assure the general public of every effort to sustain the prudent management of resources entrusted to it by the people of Ghana, it also hopes that the foregoing clears any misunderstanding that resulted from the submission made to the Public Accounts Committee of Parliament.