BOST paying ¢9.1m, $3m ‘avoidable judgment debts’ to 3 contractors for contract breaches

The Bulk Oil Storage and Transportation Company Limited (BOST) “continues to pay avoidable judgment debts” in the forms of cost and interest amounting to GH¢9,169,884.48 and US$3,057,096.00 to three contractors for breach of contract and undue delays in the payment of legitimate contract sums, the 2021 report of the Auditor-General has found.

“We recommended that the management apply appropriate sanctions on all officers whose negligence have occasioned the loss”, the report said.

Additionally, the A-G said his office urged the management to heed all contract terms and indulge in negotiations rather than lawsuit in resolving disagreements.

Read relevant excerpts of the report below: We noted after a review of the Board’s policy documents that, the Board has no policy guidelines on how BOST’s financial resources should be invested but did an investment with some financial institutions leading to lock up of funds to the tune of GH¢19,665,333.36. We recommended that the Board should develop a policy document to guide future investment decisions of the company.

We noted that three (3) Companies, Unity Enginmac Co. Precious Engineering and Dass-B Electricals bided for the award of contract for the installation of LED bulbs and streetlights for BOST of which Enginmac Co was recommended by the evaluation team for the award of the contract to the tune of GH¢178,252.52.

We noted further that, Unity Enginmac Co. Ltd and the two other alternative tenderers namely Precious Engineering and Dass-B Electricals who participated in the procurement were all owned by one person. We recommended that the contractor be invited to explain the ownership of the companies and tender documents submitted and admonish the evaluation team to do proper due diligence in the selection process as this lapse was identified in the previous year audit and cautioned.

Contrary to Public Financial Management Act/Regulations, we noted that, BOST did not obtain VAT invoices/receipts for payments totaling GH¢726,376.33 with a VAT component of GH¢127,115.86 made to suppliers and service providers for the period under review. We requested Management to obtain the requisite VAT invoices/receipts covering the payments totalling GH¢726,376.33 by 31 March 2022 failing which the VAT component of GH¢127,115.86 should be recovered from the authorising and approving officials and paid same to the Commissioner General, Ghana Revenue Authority and submit the evidence for verification.

We noted that BOST requested for extension of the Terminal Management Contract between BOST and TSL Logistics (Ghana) Limited in a letter referenced BOST/SCR.35/PPA/30171 dated December 19, 2019, to which approval was granted by the Public Procurement Authority (PPA) referenced PPA/CEO/01/57/20 of January 20, 2020, to cover the period December 31, 2019, to March 31, 2020, at a cost not exceeding US$300,000.00. However, upon the expiration on March 31, 2020, Management did not obtain prior approval from PPA for the additional contract extension period of six (6) months at a cost of US$1,800,000.00 with TSL.

We recommended that Management should provide the audit team with justification leading to the contravention and further write to PPA in accordance with Section 90 of Act 663 as amended failing which the offences relating to procurement under Section 92 shall be applied to the officers who authorised and sanctioned the transaction.

We noted that the Management of BOST awarded the contract for the repair of Tanks at the Accra Plains Depot, Buipe and Bolgatanga Depot in letter referenced BOST/SCR.35/PPA/PRO/SP.1/31694 dated August 27, 2020, to Rocksure Energy Limited at a contract sum of GH¢11,712,513.84. The audit team inspected the repaired tanks at Buipe and observed that although the repairs claimed to be completed for T-1, 2, & 3, the tanks have not been put to use due to the non-functioning of the Old Depot Loading Gantry and other additional works not yet carried out.

Also, Tank 102 repairs was partially done because the replacement of the Internal Floating seal are yet to be fixed. Tank (T-103) at APD though repairs work completed but the tank is not in use. We recommended to management to ensure that Messrs. Rocksure Energy ltd complete the repair works on Tank (T-102) and commission all the tanks repaired before the payment of the contract retention amount of GH¢1,171,251.31 after the expiration of the defect liability period (included is an amount of GH¢63,355.13 for commissioning) for our verification.

We urged management to operationalise the Old Depot Loading Gantry at Buipe within the shortest possible time with the provision of 9No. Loading arms, 9No. Meters, 4No. Pump, motorisers, strainers and other accessories. We also require the acquisition of new pumps and other accessories to enable tank (T-103) to be operational at the Accra Plain Depot (APD).

Our visit to the Debre Marine Port located in the Savanna Region, noted that the port has a lot of idle or unused equipment which may have alternative use at the various deports of the company. We advised Management to use the new tugboat engine to construct an additional boat for its operations, since BOST has only one tugboat. BOST can then reallocate the other idle equipment to other depots where they may be needed or dispose of other equipment that are not needed in other to obtain value for money for such assets.

We noted that that Management of BOST engaged four (4) contractors or service providers without any proper procurement processes and in addition did not sign written procurement contracts to detail out the various responsibilities of the parties and the terms of reference of the services rendered. The Management of BOST has so far paid GH¢12,046,746.16 for the specified periods to the service providers. We recommended that Management should take the necessary steps to regularise the transactions with the service providers by writing to the Public Procurement Authority to regularise the transaction in accordance with Section 90 of the Public Procurement Act, 2003 (Act 663) as amended, failing which the authorizing officers should be sanctioned in accordance with Section 92 of the same Act.

We noted that, the Management of BOST after the award of Six (6) different contracts to contractors undertook various forms of additional works or variation, which were avoidable and relatively excessive with respect to the cost or value. Analysis of these variations ranges from (20.23% to 93.17%) increment based on the total initial contract sum of GH¢33,542,663.43 with a total change order or variation and additional cost of GH¢29,981,122.28 and increased the overall contract sum to GH¢63,523,785.71. Out of Six (6) contracts varied, two (2) were awaiting approval from the appropriate approving authority. We advised Management to assign a qualified quantity surveyor (QS) to the works department to augment their efforts and bring about efficiency and value for money in the award of contracts or to employ the service of QS as may deem fit for a particular stage of a transaction.