Waste bins contract to Jospong may be inflated by GHC130m
Joy News can report that a contract awarded by the Ministry of Local Government and Rural Development for the procurement of one million waste bins and disposable bin liners has been inflated by at least 130 million Ghana Cedis.
After nine months of investigations, Joy News found that all the five companies handpicked by the ministry to supply the waste bins are subsidiaries of the Jospong Group of companies.
In the first of our comprehensive investigative series titled Robbing the Assemblies, Manasseh Azure Awuni finds the Office of the President, the Local Government ministry, and the Jospong Group are involved in the questionable waste bins contract.
In November 2016, the Ministry of Local Government and Rural Development awarded a contract to five companies to supply one million waste bins and 900,000 bin liners at a cost of $74, 040,000 (GHC318million).
The cost of the one million waste bins is $60 million while the cost of the bin liners is $14, 040,000. These amounts do not include Value Added Tax. The contract was awarded through sole sourcing, with approval from the Public Procurement Authority (PPA).
A letter, written by then sector minister, Collins Dauda, to the PPA cited urgency as the justification for using the single source procurement method. He said the bins were urgently needed because it was approaching the rainy season and there was the possibility of cholera outbreak.
This letter of approval from the PPA is dated 27th October 2016 when the nation typically is expected to be experiencing dry season. Nevertheless, the PPA approved the sole-sourcing method and the contract was awarded to the five companies:
1. Universal Plastic Products and Recycling company Limited
2. Yeeco Plastics Ghana Limited
3. JSA Logistics Limited
4. Able Plastic Recycling Limited
5. Meridian Waste Management Services Limited.
Joy News investigation has revealed that all five companies are subsidiaries of the Jospong Group owned by Joseph Siaw Agyepong of Zoomlion.
The President of the Ghana Institute of Procurement and Supply, Collins Sarpong, is questioning the procurement method.
"Once you have identified more people within the market, why use sole-sourcing?” he asked.
He said if there was an urgent need to supply the waste bins, the ministry could have used restrictive tendering. He said it was curious that as many as five companies belonging to the same group were contracted to supply the same product.
At the 10th anniversary of Zoomlion last year, Joseph Siaw Agyepong announced that his company would distribute free bins to Ghanaians in 2017.
"We were the first company to distribute free waste bins to households in Ghana. Currently, we have distributed 200,000. Our vision is to distribute one million free waste bins to all households in the year 2017,”he told the audience, which included President John Mahama and some of his ministers of state.
But it appears the cost of the bins is going to be borne by the state and not an act of kindness by Joseph Siaw Agyepong as his speech suggested. Joy News investigation has revealed that the cost of the contract may have been inflated.
The cost of a 240 litre waste bin as advertised by the leading producers of waste bins in Ghana, which are also suppliers of waste bins to the Local Government Ministry is GHC135.
A pro forma invoice Joy News secured from the Universal Plastic Product and Recycling Ltd, a subsidiary of the Jospong Group, quoted the cost of a bin of this size as GHC150. An earlier contract awarded by the Local Government Ministry for the supply of waste bins and sighted by Joy News charged GHC15 to transport each waste bin.
Even if the cost of transportation for each waste bin for the Jospong Group is increased from GHC15 to GHC20 (33.3% increment) the cost per waste bin should be GHC170. However, the contract with the Jospong Group quotes $60 per waste bin or GHC258 with the exchange rate of $1 to GHC4.3 at the time the contract was signed.
This is about GHC88 million higher than the actual estimated cost. This could be as high as GHC103m (GHC15 million more) if compared with the prices advertised by other waste bin suppliers used by the ministry by the ministry previously.
Also, a packet of disposable bin liners from Universal Plastic Product and Recycling Ltd costs GHC15.8 or $3.6. This means the 900,000 bin liners will cost $3.3 million. But the contract quotes $14,040,000, a difference of about $10.7 or GHC46.1 million. Together with the waste bins, this contract appears to have been inflated by over GHC134 million or $31.1 million.
Joy News investigation has revealed that the ministry was instructed by the Office of the President to procure the waste bins for distribution to households. In a letter dated September 15th 2016, then Chief of Staff, Julius Debrah, directed the minister to take steps to “procure an initial one million litter bins” for household distribution.
"Reports reaching the Presidency, however, indicate that the indiscriminate littering of waste is still a very big challenge confronting the MMDAs [metropolitan, municipal and district assemblies] and the country as a whole.
The indication is also that most households lack disposal facilities such as litter bins and hence they resort to dumping in open places and particularly in open drains … To reverse this serious challenge, your ministry is to take necessary action to facilitate the procurement of an initial One Million litter bins for distribution to households to be used for waste disposal,” the Chief of Staff stated.
The ministry of Local Government and Rural Development as well as the minister in charge at the time of the contract, Collins Dauda, have declined to comment on the matter.
The Jospong Group of companies has also declined to comment on the contract. The former Chief of Staff, Julius Debrah, who signed the letter initiating the contract has also declined to speak on the matter.
But further investigations by Joy News reveal there is something about this contract that may be as equally scandalous as the inflation of the contract sum.