‘Judgement debt looms’ over termination of ongoing intelligent traffic project

Think tank IMANI Africa, has said there is a glaring case of judgement debt that Ghana could soon be hit with over government’s decision to terminate an ongoing traffic management project.

Giving details of the issue in its periodic IMANI Alert, the think tank said the $ 236.10 million Accra Intelligent Traffic Management Project (AITMS) has been re-awarded to another Chinese contractor smacking of bad faith and poor diligence on the part of the government.

“China Development Bank (CDB) is to provide up to 85% of the funding and the Government of Ghana expected to provide the 15% counterpart funding.

“In a confusingly dramatic fashion, the ongoing project has been re-awarded to another Chinese contractor smacking of bad faith and poor diligence on the part of government,” IMANI stated.

Below is a timeline of the AITMS project contract with the first contractor, according to IMANI:

1. September 17, 2012.

Government of Ghana signs AITMS Project Contract with Beijing EVERYWAY

2. December 31, 2018

Parliamentary Approval is granted for Beijing EVERYWAY to execute the project.

3. April 3, 2019

Signing of Project Financing Agreement between the Ministry of Finance and the China Development Bank

4. August 2, 2019

President commissions Traffic Control Centre Project

5. November 11 – 17, 2019

Ministerial Technical Team visits China for Inspection of Beijing EVERYWAY materials due for Shipment

6. January 20, 2020

Government defaults on project payment affecting work progress

7. February 21, 2020

Project Commencement Ceremony conducted by the Minister of Roads and Highways with representation from the Chinese Embassy.

8. April 24, 2020

Technical meetings are held from which Vice President directs Beijing EVERYWAY to continue as project contractor and Ministry of Roads as the implementing agency.

9. July 1, 2020

Beijing EVERYWAY serves Government with Notice of Extension of Project Time due to delayed payment.

10. July 2, 2020

Office of the President changes Project Contractor to Huawei and Owner to the Ministry of National Security potentially sparking a legal dispute with Beijing Everyway.

11. July 28, 2020

PPA grants Sole Sourcing Approval for HUAWEI Company as project contractor in partnership with China National Technical Import and Export Corporation.

12. October 27, 2020

Beijing EVERYWAY serves Government with Letter of Demand for ongoing project payments and financial charges

13. November 6, 2020

Under the certificate of urgency, Parliament before going on recess approves Huawei as new project contractor and grants USD 25.8 million tax waivers for import subsidies.

14. November 9, 2020

Beijing Everyway threatens lawsuit on Government for breach of contract. Majority in Parliament defends the re-awarding of contract whiles Minority warns of judgement debt and opposes the deal.

15. November 19, 2020

Parliament rescinds its approval decision on the contract agreement between the Government of Ghana (Ministry of Roads and Highways) and Beijing Everywhere Company of USD 100 million.

The foremost striking concern, according to IMANI, is the unexplained reason motivating the spontaneous re-awarding of an existing project contract.

Read the full IMANI Alert below.

IMANI Alert: The Accra Intelligent Traffic Management Project (AITMS); How to use Legal Plunder to Terminate an ongoing Project, in spite of glaring Court Judgement Debts.

Good news emanating from Ghana’s public procurement system is rare. At least in the recent past, corruption and financial waste has riddled a good number of deals the office has been engaged in. While we still fight against this seeming norm, it is of troubling concern when international contracts are handled by the State in a manner that results in unnecessary legal disputes and judgements debts. The Accra Intelligent Traffic Management Project (AITMS) is yet another case where the country is being ripped off, albeit an avoidable one.

The purpose of the AITMS project, originally signed in 2012 by the previous government, is to improve the performance of the traffic lights system in Accra and reduce traffic congestion in the capital city through a coordinated traffic signal system and a centralized control centre for all traffic signals. The total cost of the Project was to be financed through the China Development Bank (CDB) Financing Agreement between Government of Ghana and China Development Bank. Under the arrangement, the total component cost is US$ 236.10 million; the road component is US$136.1 million, whilst the Accra Intelligent Traffic Management System is US$100 million. CDB is to provide up to 85% of the funding and Government of Ghana expected to provide the 15% counterpart funding.

In a confusingly dramatic fashion, the ongoing project has been re-awarded to another Chinese contractor smacking of bad faith and poor diligence on the part of government.

The original project contractor, Beijing Everyway Traffic & Lighting. Co, Limited, had its ongoing works commissioned by the current President himself in August last year in what was noted as the first Traffic Control Centre in West Africa. Never mind that the same project received a special commencement ceremony on February 21 this year conducted by the Minister of Roads and Highways, Hon. Kwesi Amoako-Atta and along with it a good press coverage.

The new contractor, Huawei Technologies Co., Limited and China Technical Import and Export Cooperation (CNTIC) have on 6th November secured in parliament (under the certificate of emergency) $100 million project approval and waiver of such Import Duties, Import VAT, GETFund Levy, NHIL, EXIM Levy, Special Import Levy and Domestic VAT amounting to the Ghana Cedi equivalent of Twenty-Five Million, Eight Hundred and Thirteen Thousand, Eight Hundred and Fifty United States Dollars and Sixty-Six Cents (US$25,813,850.66) on materials, equipment, and services to be procured for the Project.

Even more puzzling, the Presidency has directed the Ministry of National Security to replace Ministry of Roads and Highways as the owner or implementing agency of the Traffic project. Interestingly, these new directives sharply conflict with that of the Vice President, who after chairing several Technical Committees of this project in April this year ordered for the continuation of original terms of the project with Beijing Everyway as contractor and the Ministry of Roads and Highways as implementing agency.

At best, these events tell strongly of an apparent lack of coordination and harmonization at the seat of central government. At worse, they could only have been precipitated by a political turf war at the Jubilee House stimulated by the opportunity of procurement. If these hypotheses are not plausible, how else can be explained the conflicting divergence at the presidency on the pathway of a national project in a manner that offends the Public Procurement Act and the Public Financial Management Act. It is of no wonder now that the State is receiving from Beijing Everyway the threat of law suit for breach of contract in a what could potentially cause Ghanaians a judgement debt of USD 100 million.

Here is the main chronology of events followed by an analysis:

1. September 17th, 2012

Government of Ghana signs AITMS Project Contract with Beijing EVERYWAY

2. December 31st, 2018

Parliamentary Approval is granted for Beijing EVERYWAY to execute project

3. April 3rd, 2019

Signing of Project Financing Agreement between Ministry of Finance and the China Development Bank

4. August 2nd, 2019

President commissions Traffic Control Centre Project

5. November 11 – 17, 2019

Ministerial Technical Team visits China for Inspection of Beijing EVERYWAY materials due for Shipment

6. January 20th, 2020

Government defaults on project payment affecting work progress

7. February 21, 2020

Project Commencement Ceremony conducted by the Minister of Roads and Highways with representation from Chinese Embassy

8. April 24th, 2020

Technical meetings are held from which Vice President directs Beijing EVERYWAY to continue as project contractor and Ministry of Roads as the implementing agency

9. July 1st 2020

Beijing EVERYWAY serves Government with Notice of Extension of Project Time due to delayed payment

10. July 2nd, 2020

Office of the President changes Project Contractor to Huawei and Owner to Ministry of National Security potentially sparking legal dispute with Beijing Everyway

11. July 28th, 2020

PPA grants Sole Sourcing Approval for HUAWEI Company as project contractor in partnership with China National Technical Import and Export Corporation

12. October 27th, 2020

Beijing EVERYWAY serves Government with Letter of Demand for ongoing project payments and financial charges

13. November 6th, 2020

Under certificate of urgency, Parliament before going on recess approves Huawei as new project contractor and grants USD 25.8 million tax waivers for import subsidies.

14. November 9th, 2020

Beijing Everyway threatens law suit on Government for breach of contract. Majority in Parliament defends the re-awarding of contract whiles Minority warns of judgement debt and opposes the deal

15. November 19th, 2020

Parliament rescinds its approval decision on contract agreement between Government of Ghana (Ministry of Roads and Highways) and Beijing Everywhere Company of USD 100 million.

Issues and Concerns

1.The foremost striking concern about the project timeline outlined above is the unexplained reason motivating the spontaneous re-awarding of an existing project contract. The improper termination and re-awarding of contracts as was seen in the UNI-PASS contract are far becoming rampant. These acts most often than not spring from needless collusions and schemes that violate good governance principles.

In furtherance of project harmonization, the Vice President rightly called for the two technical meetings between Minister of National Security, Minister of Finance, Minister of Roads & Highways and the Deputy Attorney General on the 7th and 9th April 2020. It is noteworthy that the technical teams appreciated that the components of the project to be undertaken be rescoped and split between Ministry of Roads and Highways and Ministry of National Security. Conclusively however, the Ministry of Roads and Highways was to continue as the implementing agency and Beijing Everyway the contractor.

In the face of a judgement debt, the last-minute project changes from the presidency few days to the election deservingly beg for an explanation to the public. At the barest minimum, there should be a convincing competitive advantage that the State will gain from improperly terminating an ongoing contract and re-awarding it.

Chairman of the Defense and Interior Committee of Parliament, attempts to provide for this in a rather weak explanation that the contractor had not yet secured permit and license from the National Communication Authority (NCA) in executing the project. Even assuming that this permit is a crucial need, could a simple notification of this requirement and subsequently granting it not have sufficed?

2. Second, the procurement processes involved in this project gue we suffer with sole sourcing of contracts. Each year, millions of dollars belonging to tax payers are lost due to the undying love our politicians have for sole sourcing and restricted procurement tenders. Why are our governments almost always bent on excluding open and transparent participation in our procurements? The gains in open and competitive tendering are evident and cannot be belabored.

Fancy however the consideration that the original contractor had to be terminated on good grounds for which reason the project procurement needed reopening - why should the new contractor be necessarily be secured under the certificate of sole sourcing? Where is the transparency and openness that should underride the transactions of government? Where is the value for money concern in protecting public purse?

Be that as it may, the Public Procurement Authority (through the Acting Chief Executive) on July 28th, 2020 granted sole sourcing approval allowing the Ministry of National Security to extend Phase II of Integrated National Security Communications Enhancement Project to include the AITMS project to be executed by Huawei Technologies Company Limited in partnership with China National Technical Import and Export Corporation. The contract is in sum of USD 100 million.

It is commendable that the PPA cautioned the Ministry to ensure that the Ministry of Roads and Highways properly terminates any contracts with Beijing EVERYWAY Traffic & Lighting Tech. Co., Ltd. “to avert possible litigations”. Yet, it is curious why the same institution would not wait on evidence of contract termination before re-awarding the ongoing government contract. On the other hand, Parliament is now (November 19th, 2020) hurriedly rescinding its earlier approval decision of the original contract agreement with Beijing Everywhere Company, some 4 months after PPA’s sole sourcing approval Huawei Company, leaving in its way many questions than answers.

3. Third and conclusively, it is extremely dangerous for Parliament to take lightly its sacred duty of checks and balance. There is clearly absolutely nothing achieved by a Parliament that is always in haste to approve anything and everything before it. Due diligence and strict accountability should not be sacrificed for expediency. Ghanaians may no longer accord the much-cherished reverence to its legislature, and rightly so, if Parliament and elected parliamentarians fail to promote and protect the interest of citizens. Much is the trust Ghanaians repose in the scrutiny and supervisory role that Parliament offers to the Executive arm of government. When therefore, calculated schemes and transactions, wherever they may emanate from flout good governance principles with consequent financial loss to the State, the nation and its people will be well-served when the public interest is put foremost.