Vice President Dr. Mahamudu Bawumia during his visit in 2018
The Ghana Irrigation Development Authority (GIDA) has defended the $12 million payment made to the contractor for the Pwalugu Multipurpose Irrigation Dam project.
In a press statement dated May 28, GIDA clarified that the payment was in accordance with the contract terms, requiring the contractor, Messrs Power Construction Corporation of China (POWERCHINA), to receive $11.9 million as a mobilisation fee upon providing an "advance payment guarantee from a reputable bank."
GIDA emphasised that the government faced no risk in approving this payment, countering claims that no work had been performed.
The statement highlighted that the contractor had delivered pre-construction documents and completed some physical work, including building a camp and access roads.
The payment has been scrutinised by minority members of Parliament's Works and Housing Committee, who recently visited the project site and expressed disappointment over the progress.
The MPs alleged that the contractor had sold project materials and abandoned the site.
Edward Bawa, the Member of Parliament for Bongo, called for the prosecution of those involved in approving the $12 million payment.
However, GIDA maintained that the payment was legitimate and secured by a bank guarantee worth $60.7 million.
"No frivolous payments have been made, and the $11.9 million paid to the contractor was fully covered by a bank guarantee valued at $60.7 million. All payments made were for specific activities executed under contract," GIDA stated.
The authority further explained that the terms of the contract were strictly adhered to after the contractor provided the advance payment guarantee from Stanbic Bank.
"Under the contract, the government was expected to pay $48,570,889.69 (12% of the total contract sum of $404,757,414.06) as mobilization to the contractor, subject to the provision of an advance payment guarantee from a reputable bank," the statement read.
Upon receiving the advance payment guarantee valued at $60,713,612.11 from Stanbic Bank, a sum of $11,949,088.06, representing 25% of the total advance mobilization required, was paid in three tranches.
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