Ghana losing millions to overpricing of projects – Bawumia

The Vice President, Dr. Mahamudu Bawumia, has bemoaned the challenge of overpricing of projects in Ghana indicating that the practice has caused huge financial loses to the State.

To that end, he has charged stakeholders and participants at a Value for Money Conference in Accra to urgently develop and propose strategies that will help government to put an end to the practice, particularly in the construction of Roads, Hospitals and Schools.

Speaking at the Value for Money Conference, held at the Marriott Hotel, Dr. Mahamudu Bawumia said government has been taken aback by certain figures that have been quoted as cost for the construction of projects in Ghana in recent past.

“According to some estimates, if Dangote can build a 1000 bed capacity for nearly under $20 million, it begs the question why Ghana builds an even smaller capacity (about 400-bed facility) for nearly $300 million. Something is not right here,” the vice President said.

The Vice President added It is “imperative that at the same time as seeking suitable investment opportunities to meet the infrastructure gap that the Government takes steps to ensure cost efficient program design and delivery to reduce financial wastage and protect the public purse”.

The Vice President underscored that over 90% of corruption cases relate to procurement saying “It is therefore very important that we pay attention to the procurement processes.”

The Vice President added that “the Wold Bank estimates that on average, Ghana invests approximately $1.2bn per year in Infrastructure projects. The Africa Infrastructure Diagnostic Report in 2010 (AICD) also identified that $1.1bn is lost each year, in Ghana, on Infrastructure projects due to project delivery inefficiencies and for Ghana to meet its infrastructure deficit, $1.5bn is required, each year for the next 10 years”.

At a recent meeting of the Economic Management Team, the Vice President noted that “it emerged that Ghana constructs 60-80 bed district hospitals for $25 million! I said “Ebei!”. You will hear today that the African Development Bank constructed a 150 bed hospital in Accra for some GHC5.76 million or $1.3 million without equipment.

“Even if we have to equip this hospital for some $1 million, the total cost cannot get to more than $3 million. So how come we are building district hospitals for $25 million, a figure which even excludes the tax exemptions granted on equipment imported for the hospitals? So for one hospital that Ghana is currently constructing, we could have built and equipped 6 hospitals.”

In his welcome address, Minister for Finance and Economic Planning, Ken Ofori Atta bemoaned the effects that project overpricing has on the budget and the huge payments government has to make in that regard.

He called on the stakeholders to come up with real solutions to the phenomenon of project over pricing through an honest discussion at the conference.