The Parliament of Ghana on Friday approved an additional financing facility of $150 million for the ongoing Greater Accra Resilient and Integrated Development (GARID) project amid strong disagreement by Members of the minority. The approval was given by a majority vote of 137-132 of Members present. The position of the minority group bothered on the how the first $200 million of the project sum has been used so far stating that not much work has been done on the project. According to the minority, $65 million out of the $200 million was paid into a COVID-19 account while only $8 million was disbursed out of a draw down of $127 million. Therefore, no extra funding should be voted but rather see to the accelerated implementation of works while speeding up disbursement of project funds would warrant approval of additional funds for the project.
The government’s justification for seeking additional financing of $150 million is for government to pay compensation to project affected persons, reimburse the project with the amount reallocated for the COVID response programme, reimburse forex losses and to pay for variation in project cost.
There are 5 components identified in the GARID project which includes the following: 1. climate resilience drainage and flood mitigation measures, 2. solid waste management capacity improvements, 3. participatory upgrading of targeted flood prone low-income communities and local government support, 4. project management, and 5. contingent emergency response. The Committee of Finance, however, noted that the additional funding of $150 million will be used to address the financing gap in component 1 adding that the reallocation of the $65m from Component 1 to fund the COVID-19 Response Programme resulted in inadequate funds to support planned activities.
Other activities the $150m will be used for includes finance compensation to project affected persons as well as cost overruns due to inflation and underestimation of costs of key infrastructure. According to the Committee, cost estimates at appraisal were based on pre-feasibility studies. The cost overrun will however affect three key components of the project as follows;
a. Component 1 – US$53,740,000.00
b. Component 2 – US$12,821,289.09
c. Component 3 – US$2,000,000.00
Background
The GARID project is a Government of Ghana (GoG) attempt to reduce flooding along the Odaw River Basin. In 2020, GoG procured a $200m loan from the World Bank for the implementation of the GARID project. The objective of the project is to improve flood risk and solid waste management in the Odaw River Basin and improve access to basic infrastructure and services in the targeted communities with the Basin. The Finance Committee noted that an amount of US$94,586,845.22 was committed to various projects as at 15th March, 2024 and an additional US$64,999,341.80 was transferred from the Climate Resilient Drainage and Flood Mitigation Measure for COVID-19 related expenditure leaving uncommitted funds at US$40,413,812.98. The uncommitted amount was made up of compensation and MMDA grant of US$18,950,000, exchange losses of $5,080,000 and uncommitted project funds of $16,383,812.98.
The additional $150m for the GARID Project from the World Bank’s International Development Association has a repayment period of 25 years with a grace period of 5 years at an interest of 1.39% sum of one and 1.25% per annum plus the Basis Adjustment to the Interest Charge (+14bps) on the Withdrawal Credit Balance. The GARID Project became effective in February 2020 expected to be completed in December 2025.