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Pwalugu Dam: $12m payment was for mobilisation, not final work – GIDA clarifies

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The Ghana Irrigation Development Authority (GIDA) has justified the disbursement of $12 million to the contractor responsible for the Pwalugu Multipurpose Irrigation Dam project.

In a press release dated May 28, GIDA clarified that the payment was in accordance with the contractual agreement, which stipulated that the contractor, Power Construction Corporation of China (POWERCHINA), would receive a mobilization fee of $11.9 million upon furnishing an “advance payment guarantee” from a recognized financial institution.

GIDA also explained that the government was at no point, at risk by approving the payment and 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).”

Minority members of Parliament’s Works and Housing Committee raised concerns over the payment and visited the project site last week to inspect the progress of work done.

They were left disappointed because according to the members, the contractor had sold materials meant for the project and abandoned the site.

The Member of Parliament for Bongo, Edward Bawa, called for the prosecution of all persons involved in the approval of the $12 million payment but GIDA maintained that “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 insisted and clarified that the terms of the contract were holistically followed after the contractor provided the advance payment guarantee from Stanbic Bank.

“Under the contract, the Government was expected to pay $48,570,889.69 million (which constitutes 12% of the total contract sum of $404,757,414.06) as mobilisation to the contractor subject to the provision of an advance payment guarantee from a reputable bank.

“Following the receipt of the advance payment guarantee with face value of $60,713,612.11 from the contractor’s bankers (Stanbic Bank), an amount of $11,949,088.06 (25% of the total advance mobilisation required ) was paid in three tranches.”

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