$200m Saglemi housing project: Gov’t wants refund; contractor seeks compensation

The Ministry of Works and Housing is expected to reject a contract termination request by contractor behind the 5,000 Saglemi affordable housing project, Constratora OAS Gh. Ltd.

The Attorney-General has advised the Ministry, the contract already expired in 2017, rendering the contractor’s request null and void.

The advice follows several unfulfilled expectations in another expensive government attempt to provide affordable housing.

To start with, only 1,412 houses have been completed within the duration of the contract from January 3, 2014, to June 2017.

The agreement approved by Parliament has also been varied several times. First on February 27, 2014, nearly two months into the contract, the number of houses to be built was now stated as 1,502 houses.

The next amendment would come on December 21, 2016. This time the 1,502 houses were to be built in three different stages.

In all the variations, one thing remained unchanged. The cost of the project – $200m.

By the time government changed hands in January 2017, the contractor had been paid $179.9m.  Even the revised target of 1,502 was not met.

Only 1,412 houses had been built.

Constratora OAS Gh. Ltd has written to government expressing disinterest in continuing the project. It is now only interested in compensation for unfulfilled government obligations.

In a March 8 letter, the Directors of the company, Charles Maia Galvao and Ricardo Rocha Ulm da Silva, said they suffered from additional costs after government variations to the constructions.

The additional costs were the result of the disruptions caused by tax exemptions not fully conceded by government which eventually caused delays in project execution.

But government has been advised to rather seek compensation from Constratora OAS Gh. Ltd.

The letter from Attorney-General read in part that the Ministry may seek “refund of all overpayments as well as interests subject to the conduct of value-for-money-audit.”

It is not immediately clear how much government may request in compensation or how much the contractor will demand in compensation.

The report signed by Attorney-General and Minister of Justice, Gloria Akuffo, said all the variations in the original agreement did not have Parliamentary approval and could not have been legally binding.

She also faulted a Chief Director at the Works and Housing Ministry, Alhaji Ziblim Yakubu, for approving the variations without authorisation by the Minister as provided by State Property and Contracts Act.

The A-G said it had received no valid explanation for the contract variations and noted crimes may have committed in the government-financed scheme to make housing affordable.

She has advised that the controversial project be referred to criminal investigations organs of government.

Another housing project contract has ended with buildings uncompleted.

Under President John Agyekum Kufuor, a similar project, only more expensive, began in 2006 and was to be completed by December 2007 at a cost of $300m.

There were several other project sites, Kumasi in the Ashanti region, Koforidua in the Eastern region, Borteman and Kpone in the Greater Accra region.

Some 1,640 low-cost housing units were to sit on 300 acres of Kpone land. The works on the two other sites were to bring the total housing project to 4,700 units.

Funds for the project from the Social Security and National Insurance Trust (SSNIT) as well as HIPC funds for the project have run out. 

It is reptiles and squatters who have run in since a change in government in 2009.

The Mahama government did not continue the project. It started a new one.

The new one has come to a standstill. But government has secured $51m to now complete the old one under Kufuor administration.

The housing deficit was thought to be around 500,000 housing units. It is now believed to be 1.7m.

Yet Ghana has two gigantic white elephants.

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