The Bulk Oil Storage and Transportation (BOST) Company Limited has described as false claims by the opposition Minority Members of Parliament that it has inflated the cost of the contract for its head office building project by 100 per cent.
According to BOST, the initial cost of the project, which started in 2016 under the tenure of Mr Kingsley Kwame Awuah Darko during the Mahama administration, was revalued from $39 million to $49.6 million in 2020 but not $78 million.
The Ranking Member of Mines and Energy, John Jinapor, at a news conference on Thursday, claimed BOST had bloated the cost of its head office building project by 100 per cent.
“We noted from recent developments based on documents available to us that the original contract, which was valued at $39,000,000.00 (Thirty-Nine Million Dollars), ballooned to a whopping $78,000,000.00 if the two-tower building is accounted for based on the current cost of the single unit valued at $39,000,000.00 (Thirty-Nine Million Dollars). This means the building has been inflated by 100% over the original contract,” he said.
However, explaining the circumstances leading to the revaluation of the cost of the project, BOST said when the current government took over office in 2017; there were allegations that the contract was bloated so the project was halted for value for money audit to be conducted.
In a statement issued Friday, BOST said the process was completed in August 2020 with a new value of $49.6 million, considering the time value of money amongst other technical considerations.
“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 on 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 ($39 million twin-tower in 2015) before any new variation ($23.5 million single tower in 2020) could be submitted to the Public Procurement Authority (PPA) for approval.”
According to BOST, in May 2022, a letter from PPA with reference PPA/CEO/1079/05/22, following a request for ratification by BOST, the ORIGINAL $39 million contract for the twin-tower was finally ratified.
It further said in May 2022, a request was made to PPA to vary the original $39 million twin-tower contract to a $23.5 million single-tower, and it was granted and paved the way to execute an amendment to the original contract and it was done on the 31st of May 2022.
The company said full documentation and explanation on this project were given to the Parliamentary Select Committee on Mines and Energy as per their request on May 17, 2022, with ref: PS/ME/22/40 and “our response on May 27, 2022, with ref:BOST/SCR.40/PARL/OPRE/SF.1/36734.
“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 the rising cost of rent in the current premises. The tower blocks are not the same in terms of the facilities they harbour. 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 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 submitted to the PPA for ratification by 2 to claim the blocks cost $78 million is simply erroneous.
“These are the facts about 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 towers to house their operations.
“With an independent valuer involved, 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 are working hard to ensure better days of fuel security in the country,” the statement concluded.
Click on the link below for PPA’s document