Delay In Paying Contractors Worsening Govt’s Debt Position – Construction Chamber

The government’s consistent delay in the payment of contractors is further worsening its debt position.

 

This is according to the Ghana Chamber of Construction industry, which stressed that the government’s non-payment continues to attract penalties which balloon the amount owed them.

CEO of the Chamber, Emmanuel Cherry stated that “if a contract is being given to a contractor to execute, there are clauses in the contract that state that if you reach a certain percentage, you raise the certificate, that’s interim payment certificate for it to be honoured.”

 

“If the contractor raises the certificate, before, it used to be 28 days, but for now, it’s being revised to 91 days for the road. With regard to building, it used to be 28 days, but it’s now 45 days maximum. These are the periods mandated for the awarding agency to pay you. But here we are today, a contractor raises a certificate for 91 days. Still, the certificate has not been honoured.”

 

He added that “Within 58 days in addition, if it’s not being honoured, he has the contractual obligation to demand interest on that amount. So that also has a time span and if it also reaches, and it’s not being honoured, he comes for another interest on that interest, so you realize that most at times, government awards a contract team of 20 million, which is being published.”

 

“But at the end of each commissioning, you realize that it’s no longer 20 million. But either 30 million or 25 million, and then the media starts to raise questions as to why the contract is being bloated. It is because the government has defaulted on its path. He has not been able to pay on time, so interest upon interest has been slapped on that project.”

 

Mr Cherry also laments the economic impact of the non-payment of their monies, which in some cases are over 5 years in arrears.

The chamber has been in the news for a while now over calls on the government to pay its members.

 

The Minister for Roads and Highways, Kwesi Amoako-Atta, subsequently in August last year revealed that GHS800 million had been made available for the payment of works executed by road contractors across the country.

However, contractors stressed that the amount was woefully inadequate.

This comes at a time when the government is seeking an International Monetary Fund bailout program due to its worrying debt levels.

 

 

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Source: Citi business news