Contractors in Ghana want government to pass a law that will enforce the payment of interests on delayed payments for public construction works.
They argue that they are overburdened with high interest rates on loans from banks and often lose out when payments are delayed without interest.
For instance, government’s indebtedness to road contractors is estimated at 600 million Ghana cedis.
Although there have been efforts to clear these arrears, the contractors fear they may eventually lose out when the money is paid without interest.
The Chairman of the construction subsector of the Association of Ghana Industries (AGI), Rockson Dogbega disclosed the concerns at a media briefing to discuss challenges confronting contractors in Ghana.
“If the contractors payment is delayed for about four years whereas he would have gone to borrow from the bank at an interest rate of about 30 to 40 percent. But at the end of the day, your capital is lost and you become indebted to banks and unattractive as nobody wants to do business with you,” he told Citi Business News.
He added, “Beyond that, people are dying as a result of stress so we want the government to consider the issue and legislate the payment of interest on delayed payment. This way, the construction industry will be enhanced.”
The contractors also want the government to replace the Bid Declaration with the current Bid Security required so as to improve the liquidity of contractors, reduce the cost of projects and business operations and reduce delays in procurement procedures.
Meanwhile the contractors want the sector ministry to expedite processes to get the draft local content policy for the construction sector passed into law.
The NDC government is said to have left office with debts to road contractors estimated at 1.2 billion cedis.
The NPP government has since paid 1 billion cedis of the amount.
This comprised of GH¢664,091,476 to the Road Fund and GH¢300,400,156 on behalf of the government of Ghana.
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By: Pius Amihere Eduku/citibusinessnews.com/Ghana