- Ghana to Lose ?56b ADB Loan
THE AFRICAN Development Bank (ADB), the major funding agency which threw a lifeline of 239 billion cedis to the cash -strapped and ailing Kpong Irrigation Project (KIP) at Asutsuare in the Dangbe-West District of the Greater Accra Region, has raised serious concerns about the management of the project by the past NDC government.
The worry by the ADB stems from the fact that as at June last year, five years after the project took off, the government of Ghana had released only ?1.4billion out of the total ?36.9 billion ($5.28million)of its share of the counterpart funding.
In a letter dated December 1, 2000 which was fired to the Ghana Irrigation Development Authority (GIDA), the bank threatened to suspend further disbursement of the remaining loan after issuing a stern warning to the GIDA to live up to expectation.
If this threat by the ADB is carried out it would mean the country losing about ?56 billion in loans and grants.
The GIDA was also asked to submit Audits reports for both the loan and the grant since this was long overdue. As at last Thursday GIDA was yet to submit the said Audits reports to ADB in its headquarters in Abidjan.
The Bank also expressed its dissatisfaction with the way the consultants, MOTT McDonald Ltd, a British consultancy firm, had handled the project and demanded the abrogation of the three-year contract in December last year after the expiration of the first term of the contract.
The Kpong Irrigation Project (KIP) officially took off on November 3, 1994, after it was appraised in 1990.
Before the project took off, ADB had agreed to give the government a loan of $34million,( about ?239.2billion) of which $2million(?14billion) was in the form of a grant.
The Arab Bank for Economic Development in Africa (BADEA) came on board as the project co-financier with a loan of $9.34million (about ?65.4billion). The ADB further released 900,000.00 pounds sterling, (about ?9billion), as three years consultancy contract fees to MOTT McDonald Ltd.
The total loan package by the two banks for the Kpong Irrigation Project therefore stood at ?304billion.
Under the terms of the agreement, the government was expected to provide $5.20 million as counterpart funding for the successful implementation of the project. Areport by an ADF Supervision Mission to the Kpong Project site stated that 'The mission noted that the completion of the BADEA-funded rehabilitation and infrastructure project had been delayed for a year and half because the contractor had not received the government's 25 percent contribution to the contract.' The ADB team which visited Ghana on July 26 to August 9, 2000 to supervise the progress of the project was led by Dr. Medhat M.Sabri, Principal Socio-Economist.
The team noted that the unwillingness by the government to play its expected role in the implementation of the project was impacting negatively on the ADB as an international financial institution. The mission therefore reminded the Ministry of Finance and the Ghana Irrigation Development Authority (GIDA) to make government funds sufficiently available to the project at the beginning of each financial year to avoid any future delays in its implementation.
Surprisingly while the government could provide ?36billion as its part of the counterpart funding to sustain the KIP which was to help the nation reduce its rice importation and become self sufficeient and even have some for export, the government managed to squeeze $21million loan for the so-called American investor, Ms. Cotton.
The deadline for the last disbursement of the loan was set for December 31, 2000, but the project is far from completion, as the government has woefully failed to play its expected role.
Chronicle gathered that the ADB delegation, which visited Ghana last year on two different occasions to assess the progress of the project, were shocked at what they saw at Asutsuare, in the Greater Accra Region.
KIP was expected to be able to stand on its feet at the end of the first term. The infrastructure, facilities, training and other basic requirements that should have been put in place were lacking.
Chronicle gathered that when MOTT McDonald Ltd, led by its controversial team leader Tonnis Jean Sierevogel arrived in 1997, they waited for almost one year without doing any serious business due to unwillingness on the part of the then NDC government to release its part of the counterpart funds for the project.
The Ghana Irrigation Development Authority (GIDA), which was expected to execute the project, has also failed to ensure that the consultant (MOTT McDonald) Ltd abide by their contract agreement by training Ghanaian staff to take over from the consultant after the expiration of the their first three-year contract.
At the end of the visit by the ADB team, it was realised that MOTT McDonald Ltd this time round had failed to deliver.
The ADB team led by its Senior Financial analyst, Mrs Margaret W. Karuru, after touring the KIP project for almost a week and meeting and holding discussions with the farmers realised that MOTT McDonald Ltd had failed to train staff to take over as stipulated in the contract, while farmers were not given any training, even though the Bank had made provision for farmers and staff to be sent to other countries where irrigation farming was prevailing to learn and compare notes.
'The package provided resources for the training of GIDA staff, Project Management United (PMU) staff and farmers, it is unfortunate that the project is scheduled to close and no staff training has taken place," the ADB team from Abidjan wrote.
Originally $36million was voted for the construction of the project. This was to include 3,000 hectares of irrigated land, warehouses for storage of rice and drying floors.
The project was to include rice mills for processing rice, machinery and equipment (power tillers and harvesters). Access roads, bridges and well constructed drains, were to be provided. Yet, only half the land had been prepared somehow, leaving the remaining untouched.
The warehouses used at 'Area A' near Lukose at Asutsuare were old warehouses constructed ages before the KIP took over the management of the place. The funds were under utilised for the project. Before the NDC government left office, there was no indication that the government was prepared to put in place the things that were supposed to have been captured by the project.
ADB sources told Chronicle that since they had entered into a contract with the government of Ghana and had performed their part of the contract, there was the need for GIDA/KIP to also perform their expected role.
Due to poor construction work, the rice fields always get flooded during heavy rains.
When Chronicle contacted Tonnis last Tuesday afternoon for his comment at his office in Asutsuare, he refused to talk and referred Chronicle to the GIDA Chief Executive in Accra.
Reacting to the concerns, Mr. O.K Gyateng, Chief Executive of GIDA saw nothing wrong with MOTT McDonald Ltd team.
'The consultant has lived up to expectation' he said.
He confirmed that the consultant spent almost one year virtually doing nothing when they arrived in 1997 due to the inability of the government to release the counterpart funds for the commencement of the project.
On why the government did not terminate the MOTT McDonald contract after the ADB had recommended, Gyeteng claimed that the report which recommended the termination of the consultant's contract was influenced by some people who wanted to see the back of the consultant.
He stated that since the contract was subject to renewal, based on satisfactory performance, the Ministry of Food and Agriculture and GIDA felt the consultant had performed well enough and as a result renewed the contract last December.
