The Ghana Irrigation Development Authority (GIDA) has released a statement to clarify the payment of $11.9 million to the contractor responsible for the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP).
According to GIDA, the PMDIP is a robust dam system designed to address flood issues stemming from the Bagre Dam’s excess water in Burkina Faso, featuring two significant components.
Furthermore, GIDA stated that Component 1 includes a 60MW Hydro-Power Dam and a 50MW Solar Power System, which are being implemented by the Volta River Authority (VRA) in collaboration with the Ministry of Energy (MoEn), at a cost of USD 588,242,585.94.
“Component 2 is the development of a gross area 25,000 Ha Irrigation Infrastructure downstream of the Hydropower Dam to be implemented by Cihana Irrigation Development Authority (GIDA) under Ministry of Food and Agriculture (MoFA). The total cost of the Irrigation components of the PMDIP is USD 404,757,414.06”.
GIDA
Moreover, GIDA clarified that the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP) was awarded in two separate packages, each covering a specific aspect of the project’s engineering works.
Accordingly, GIDA indicated that POWERCHINA was awarded two distinct Engineering, Procurement, and Construction (EPC) contracts, one for each component of the project, with the Ministry of Energy (MoEn) and the Ministry of Food and Agriculture (MoFA) overseeing their respective contracts.
GIDA noted that the Ministry of Food and Agriculture signed the contract for the irrigation component on August 22, 2019, formalizing the agreement and paving the way for project implementation.
Furthermore, GIDA explained that the EPC contract includes a thorough feasibility study and detailed engineering design, which are crucial preconstruction phases that must be finalized before construction can commence.
“Under the contract, Government was expected to pay USD 48,570,889.69 million (which constitute 12% of the total contract sum of USD 404,757,414.06) mobilization to the contractor subject to the provision of an advance payment guarantee from a reputable bark”.
GIDA
As such, GIDA stated that after receiving a $60.7 million advance payment guarantee from Stanbic Bank, the contractor’s bankers, GIDA paid out $11.9 million (25% of the required advance mobilization) in three installments: $2.59 million, $5.17 million, and $4.2 million to the contrator.
Accordingly, GIDA stressed that these payments were only made after the government received a bank guarantee worth $60,713,612.11 as security for the advance mobilization, providing a financial safeguard for the project.
“Even though the contractor did not get the full payment of the mobilization, they proceeded to site to begin the works”. – GIDA
POWERCHINA Begins Work On PMDIP
Furthermore, GIDA reported that POWERCHINA began mobilizing to the site in April 2021 and subsequently completed the detailed engineering designs for the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP).
More so, GIDA stated that the EPC contractor completed and submitted the key deliverables of the Project Design phase, including Topographic Survey and Mapping and Resettlement Action Plan (RAP), among others, to GIDA for review and validation between December 2020 and July 2022.
GIDA pointed out that the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP) was initially intended to be funded under the $2 billion Master Project Support Agreement (MPSA) with Sinohydro Corporation Limited, a Chinese state-owned company, signed in September 2018.
However, GIDA indicated that this arrangement encountered difficulties and ultimately stalled, forcing the government to resort to its regular budget to finance the project instead.
Accordingly, GIDA stated that due to national budget constraints, the Government is actively exploring alternative funding sources to ensure a dedicated and stable financial stream, enabling the seamless execution of all project components.
GIDA also disclosed that the contractor has submitted payment invoices (IPCs), but due to current financial constraints, the EPC Contractor has agreed to temporarily halt project work to minimize risks and protect the project’s integrity, pending improved financial circumstances.
“The weir for the irrigation and the hydro-power dam must be constructed either in consonance or the hydro-power dam must lead the weir construction to prevent the imitation infrastructure from being affected or destroyed by the floods. If not done concurrently, the irrigation infrastructure will be washed away from huge inflows often experienced during Bagre dam spillage”.
GIDA
Accordingly, GIDA emphatically stated that the payment of USD 11.9 million was for mobilization as per the contract terms and not for final payment of works done.
Additionally, GIDA emphasized that contrary to the claim that no work has been done, the contractor has delivered both preconstruction documents and some physical works – camp and access roads.
As such, GIDA assured the public that no frivolous payments have been made and the USD11.9 million paid to the contractor was fully covered by a Bank Guarantee valued at USD60.7 million.
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