Pwalugu multipurpose dam: $11.9m paid for mobilisation, not final work — GIDA

The Ghana Irrigation Development Authority (GIDA) has explained that the government paid $11.94 million to the contractor working on the Pwalugu Multipurpose Dam and Irrigation Project (PMDIP) as part payment for mobilisation for the irrigation component of the project.


The authority said although the government was required to pay $48.57 million, which represented 12 per cent of the $404.75 million cost of the irrigation component as mobilisation, it paid the said amount in three instalments.

The agency under the Ministry of Food and Agriculture (MOFA) stated that the payment was fully covered by a Bank Guarantee valued at $60.7 million, stressing that payments made were for specific activities executed under the contract.

A statement issued by the Public Relations unit of GIDA in Accra said “although the contractor did not get the full payment of the mobilisation, they proceeded to site to begin work.”

This followed public concerns on why the government had to pay the contractor for no work done on the project.

Project background

The PMDIP is a multi-purpose dam designed for flood control from spillage from the Bagre Dam in Burkina Faso, and has two major components. The first component consists of the 60-megawatt (MW) Hydro-Power dam and a 50MW Solar Power System, which is being implemented by the Volta River Authority (VRA) under the Ministry of Energy (MoEn) at a cost of $588.24 million.

The second component is the development of a gross area of 25,000 Hectares (Ha) irrigation infrastructure downstream of the hydropower dam to be implemented by GIDA under MoFA, at the cost of $404.75 million.

GIDA stated that the PMDIP was awarded as two independent Engineering, Procurement and Construction (EPC) contracts to Messrs Power Construction Corporation of China (POWERCHINA) and managed separately by two ministries, Energy and Food and Agriculture.

The release further pointed out that “contrary to the claim that no work has been done, the contractor has delivered both preconstruction documents and some physical works such as camp and access roads.”

 “The payment was covered by a bank guarantee with a face value far in excess of the payment. At no point was government at risk.” the release stressed.

Work done

Following the payment, GIDA said POWERCHINA commenced mobilisation to site in April, 2021 and completed detailed engineering designs which had been submitted to the authority for validation.

The scope of that included an Environmental and Social Impact Assessment (ESIA) done in December, 2020; Topographic Survey and Mapping completed in November 2021; Geology and Geotechnical Studies and Drawings in November, 2021 and Soil and Land Suitability Assessment in November, 2021.

Others are Resettlement Action Plan (RAP) done in March, 2022 and Cadastral Survey completed in July, last year. On construction works, GIDA said POWERCHINA had completed a 5.2-kilometre (km) access road off the main Sariba — Kpasenkpe road to the contractor's camp and 4km on site, while road in and around the camp had been completed.

The statement clarified that the contractor’s Camp and Site offices were located at Sariba in the North East Region and had 10 blocks of building with a total of 100 rooms as site offices.  

Again, the main structures had been completed at the total construction area of about 2,200 square meters. The installation of water and electricity and the water distribution of the drainage ditch were yet to be completed.

On construction of temporary and auxiliary facilities the release said the temporary housing for artisans that could accommodate 72 people had been completed. In addition, the construction of auxiliary facilities such as wood processing factory, steel bar factory, machine workshop, warehouse and temporary fuel/lubricant depot had all been completed, GIDA pointed out.

Project status

On the current status of the project, the statement said the PMDIP was originally scheduled to be financed under the $2 billion Master Project Support Agreement (MPSA) with the Chinese state-run Sinohydro Corporation Limited in September, 2018.

“Unfortunately, this arrangement stalled and government had to fall on its regular budget to finance it,” it said, adding that funding for the project stalled because per the International Monetary Fund (IMF) conditions, it didn't allow the country to borrow from China, hence the concessionary loan to be received from the Chinese Exim Bank did not see the light of day.  

Therefore, it said, the Economic Management Team decided to fund the PMDIP using government of Ghana (GoG) funds which had to pass through Parliament before approval.
Given the national budgetary constraints, the government was working on an alternative dedicated funding source to ensure that all components of the project could be executed without any major challenge.

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