GH¢135bn debt hangs over road sector - Minister designate reveals

The past government left behind a GH¢135 billion debt in the road sector, the Roads and Highways Minister designate, Kwame Governs Agbodza, has told the Appointments Committee of Parliament.

He said the amount comprised a GH₵100 billion commitment debt, GH₵20 billion for unpaid certificates for roads executed to be paid by the Government of Ghana (GoG), and GH₵15 billion certificates at the Road Fund.

“In 2018, the government was owing about GH₵113 million, and the interest on the GH₵113 million this year will be GH₵665 million,” Mr Agbodza said.

Commitment refers to all the road projects that are active but not complete, with the government having to put the contract sums together and budget to finance them.

However, the debt is what is due to be paid as a result of certificates cleared by third-party consultants or agencies such as the departments of Feeder Roads or Urban Roads.

The government is required to write cheques or transfer money to contractors for work done.

Appearing before the 11-member Appointments Committee for his confirmation hearing yesterday, Mr Agbodza, who is also the Member of Parliament (MP) for Adaklu in the Volta Region, said per the road sector documents made available to the Transition Committee by the previous government, the total funding gap in the sector could be wider.

“The situation is even worse than the GH₵135 billion indebtedness because the GH₵100 billion commitment are projects that are designed and built,” he said.

“The rehabilitation and upgrading of (the) Kasoa to Akoti road has a contract sum of GH₵1 billion for slot one, and the Akoti to Winneba road has a contract sum of GH₵987 million.

The remark is that new figures could be agreed.

“What it means is that these figures are not stable, and so the GH₵100 billion I gave you is not cost to complete.

This is the projected figure as of the time this report was prepared.

So, you will surely have to find extra money by the time you complete these projects,” he said.

He was responding to a question by a member of the committee and MP for the Daboya-Mankarigu Constituency, Shaibu Mahama, who recalled that the former Minister of Roads and Highways had told Parliament that their predecessor government had left only GH₵1.56 billion to cater for road sector indebtedness. 

Increasing interests 

Mr Agbodza told the committee, chaired by the First Deputy Speaker, Bernard Ahiafor, that in 2017, the former Roads and Highways Minister, Kwasi Amoako Atta, expressed dismay that the National Democratic Congress (NDC) government had left behind a commitment debt of GH₵17 billion in the road sector and GH₵1.5 billion as certificates approved but not paid.

He, however, said per documents that were presented to the Transition Committee before the current government took office, it turned out that the New Patriotic Party (NPP) had left a minimum of GH₵100 billion commitment debt.

He said going by the same documents, the “certificates and paid” as of yesterday from the GoG amounted to about GH₵20 billion while the ones with the Road Fund were about GH₵15 billion.

Mr Agbodza pointed out that in 2018, the government owed about GH₵113 million but the interest on that amount this year would be GH₵665 million.

“In 2019, the indebtedness was GH₵219 million and the interest on this was GH₵960 million, and in 2020, we were owing GH₵424 million and the interest on this is GH₵1.5 billion.

“In 2021, the debt was GH₵616 million and the interest on that is currently GH₵1.69 billion, and in 2022, the debt was GH₵693 million and the interest is currently GH₵1.4 billion.

“The question is how do I explain this to the taxpayers at Adaklu that we owe GH₵113 million and the interest on the GH₵113 million is GH¢665 million,” he said.

He attributed such challenges to the nature of contracts in the sector lately, “which says that if a contractor raises a certificate and you do not pay after a period of time, 30 per cent interest accrues on it.

“So, as a result of the 30 per cent, we are made to pay GH₵15 billion on Road Fund alone, and the question is what will be the interest on the GH₵20 billion owed by the GoG,” he said.

Way forward

The nominee said when approved by the House, he would work with the Finance Minister to curb such wastage in the road sector.

“We cannot accept that you owe somebody GH₵4 billion, and this year, you are going to pay a total of GH₵15 billion, including principal and interest,” he said.  

Mr Agbodza added that he did not know how the Finance Ministry would settle such indebtedness, but said he foresaw a situation where the Finance Minister would have to find GH₵50 billion for it.

“Out of that GH₵50 billion, majority of that money is not work done in your or my community, but it is interest, and I do not think Ghanaians will be happy with any of us.

“So the Finance Minister’s responsibility will be to sit down with sector ministers to deal with these unsustainable interests compounding daily so that, if possible, we can derive value for money spent on our projects,” he said.  

He also suggested the urgent need for him and the Finance Minister to sit down with industry players — contractors and the agencies that awarded road contracts — to review how road contracts were written.

“The government itself needs to take a step back to find out if it is appropriate to keep awarding contracts when no one knows where the projects are going to be financed from.

“If you go to the capital expenditure section of the 2024 Budget, you may realise that the capital expenditure in the road sector may not be more than GH₵4 billion, yet last year alone, the quantum of projects awarded was probably more than three or four times more,” he said.

Road toll illegality

A member of the committee asked whether the suspension of the road toll without recourse to Parliament was legal and sought to know his position on the reintroduction of road tolls.

Responding, Mr Agbodza said during the tenure of then Minster of Roads and Highways, Inusah Fuseini, the accruals to the Road Fund moved from around GH₵250 million annually to GH₵1.25 billion and now GH₵2 million currently through enhanced actions.

He said it was based on such increased accruals that the previous Minority cautioned the then government against the decision to suspend or cancel road tolls since it was against the Road Act which could not be unilaterally terminated.

“Indeed, we were surprised on the day they (past government) claimed they zeroed in on road toll, and for me, it was an act of illegality,” he said.