RESPONSE TO ALLEGATIONS MADE BY THE RANKING MEMBER OF THE MINES AND ENERGY COMMITTEE OF PARLIAMENT, HON. JOHN JINAPOR
Ladies and gentlemen of the press, the Ranking Member of the Mines and Energy Committee of Parliament led the minority in a press engagement in which allegations were made regarding the BOST Head Office Project. We wish to respond to the litany of allegations with the following facts:
- In 2015 (the year BOST made a colossal loss of GHc457m), it entered a contract to construct a twin-tower head office building at a cost of $39 million (VAT Exclusive).
- In 2016, BOST paid an advanced payment of $8 million for the work to begin with subsequent payments as agreed as per contract terms.
- The then management of the company BLATANTLY ignored a directive from the Public Procurement Agency (PPA) to use restricted tendering method as per letter dated 18th December 2015 with ref: PPA/CEO/12/2419/15 and went ahead with a single source contract.
- In 2017, there were allegations of inflated cost which resulted in the project being halted for value for money (VFM) audit to be carried out. This process was completed in August 2020 with a new value of $49.6million considering time value of money amongst other technical considerations.
- In February 2019, a forensic audit conducted by EOCO with ref: EOCO/ED/OPS/OCU/156/V.47/95 also confirmed that there was no malfeasance in the process.
- In March 2019, the Attorney General advised BOST to engage Rolider and proceed with the execution of the project as originally agreed.
- In October 2020, the Board of Directors of BOST resolved that due to financial constraints, BOST could not afford the twin-towers but rather proceed to negotiate with the contractor to procure a single block. The negotiated cost for the single block was $23.5 million (VAT Exclusive).
- In September 2021, we applied and received a NO-OBJECTION from the Ministry of Finance to procure the funds from an identified Bank.
- The 2020 Auditor General’s report in page 6, clause 13 flagged the Procurement Irregularity by the then management so that meant that this current management had to cure the breach on the ORIGINAL contract ($39million twin-tower in 2015) before any new variation ($23.5million single tower in 2020) could be submitted to Public Procurement Authority (PPA) for approval.
- In May 2022, by a letter from PPA with ref: PPA/CEO/1079/05/22, following a request for ratification by BOST, the ORIGINAL $39 million contract for the twin-tower was finally RATIFIED. This meant that the original breach in 2015 by the then management was cured. This then paved the way to request for the variation to the ORIGINAL CONTRACT.
- In May 2022, a request was made to PPA to vary the ORIGINAL $39million twin-tower contract to a $23.5million single-tower and it was granted and paved the way to execute an amendment to the original contract. This was done on the 31st of May 2022.
- BOST is currently occupying rented premises and in our view, securing the single block at the $23.5 million will help to do away with the burden of rising cost of rent in the current premises.
- The tower blocks are not the same in terms of the facilities they harbor. The one BOST is acquiring is customized to accommodate the staff of the company based on the corporate structure which existed at the time of the contract. The other block was intended to be rented out to raise further income for BOST.
- The two blocks per the valuer’s report in 2020 cost $49.6 million and the simplistic arithmetic of multiplying the original contract cost of $39m submitted to the PPA for ratification by 2 to claim the blocks cost $78 million is simply erroneous and mischievous.
These are the facts pertaining to the BOST Head Office building which started in 2016 and is yet to be occupied by the company.
We at this point will urge the minority to at least seek better understanding and clarification of issues before engaging the press because at some points in time, failure to do due diligence could result in embarrassment. It is the contract signed without resort to due process which by law was submitted for ratification by the PPA before any variation of the terms could be attempted by the current management. Money has time value and what costs $39 million in 2015 would most likely cost something higher six years later. These are fundamental principles of finance which cannot be overlooked.
The current management of BOST has used the Procurement Law to correct the anomalies of the processes and through a transparent process decided to acquire half of the twin-tower to house their operations.
With an independent valuer involved, we believe the figures arrived at were a true and fair reflection of the current pricing of the project and we are confident that the decision is in the best interest of the taxpayer.
We therefore urge the public to ignore the ill-informed allegations of the minority and be assured that BOST is safe and secure in the hands of the current management. The ever-loss-making BOST is set to announce a huge turnaround in the next couple of weeks due to the diligence and hard work of the current management. Our collective interest is secured, and we look forward to better days of fuel security in the country.
God bless our homeland Ghana.