In a recent article by one of our honorary VPs, Bright Simons, he utilizes IMANI’s Large-Project Due Diligence framework to explore the current NDC government’s quest to retrieve $12 million paid in advance to a Chinese contractor, PowerChina, to build the Pwalugu dam using the ORAL approach.
When the Agric Minister visited the site of the dam recently, there was nothing on the ground to show that a massive amount of GHS 192 million has been paid (see the picture). He therefore announced that the government will terminate the agreement. He said nothing about recovering the $12 million this time, however.
Bright’s article provides clues as to why the government is backtracking from the initial promise to retrieve the $12 million.
- Contractual Breaches by the Government: The government failed to honor its contractual obligations, including neglecting to release funds designated for monitoring and evaluation and missing scheduled payments of over $90 million. These breaches have weakened the government’s position in any recovery efforts.
- Premature Contract Termination: The Agriculture Minister’s announcement to terminate the contract will be in further breach of the contract if he does not first set up a Dispute Adjudication Board.
- Potential Additional Liabilities: The contractor, PowerChina, has issued formal notices of demobilization due to non-payment and is demanding an additional $12 million for unpaid certificates.
Mistakes by the Previous Government and the Current Agriculture Minister:
- Previous Government:
o Single-Sourcing Contracts: Opting for an opaque single-sourcing in awarding contracts to PowerChina without competitive bidding.
o Ignoring Contractual Terms: The government’s disregard for payment schedules and monitoring provisions.
- Current Agriculture Minister:
o Announcing Contract Termination & re-award: Terminating the contract without regard to the government’s breaches and pushing to re-award the $900 million contract is problematic.
o The original project is NOT bankable even after more than $60 million already spent on feasibility studies. Any attempt to re-award the contract will lead to more money down the drain.
Recommended Actions for Salvaging the Pwalugu Dam Project and Future Initiatives:
- Enhance Project Bankability: Engage agric sector stakeholders to develop comprehensive financing strategies that attract credible investors, reducing reliance on government budgets and ensuring project sustainability.
- Promote Competitive Bidding: Implement transparent and competitive tendering processes to secure favourable contract terms and enhance project accountability.
- Foster Public Engagement and Transparency: Publish all documents associated with the project and outline how the government will drastically reduce the $900 million as demanded by the World Bank and other potential funders.
- Investigate and establish how the contractor was able to generate payment certificates for almost $24 million when there is virtually nothing on the ground to show for it. Remember that nearly $70m has already been paid for project design and preparation between 2013 and 2019.
The full article is here: https://brightsimons.com/2025/02/pwalugu-dam-political-loot-recovery-oral-in-ghana/
