Halt E190 and Hangar Deal for Proper due Diligence to be done

The Danquah Institute is calling on the Presidency to, as a matter of urgency suspend the acquisition of one (1) Embraer 190 aircraft at a financing cost of $105 million including the construction of a hangar at the cost of $17 million for the Ghana Air Force, to be financed by commercial loans. This is to enable an independent due diligence check to be carried out, in order to properly assess the value-for-money aspect of the two transactions and consider the appropriateness of the two acquisitions per their stated purposes as provided by Government.

Though, both transactions have been duly approved by the legislature, we have been reliably informed that no proper independent due diligence has been carried out to support the integrity of the two controversial transactions.

We are therefore calling on Government to engage the services of a credible organisation, such as Crown Agents. Similar due diligence exercises have been carried out on assets acquired by Government through public procurement. These have been undertaken by Crown Agents over the years on behalf of the Government of Ghana and have saved the country millions of US dollars. We believe these two transactions warrant the kind of pre-performance value for money audit programme with which Crown Agents has been helping our nation over the years.

For example, it is recalled that in 2008, the services of Crown Agents were employed by the then Minister of Interior in the erstwhile Kufuor administration, Dr. Kwame Addo Kufuor, when fire tenders were to be procured for use by the Ghana Fire Service.

Indeed, the procurement of the fire tenders ordered under Dr. Kwame Addo Kufuor was only completed this year after due diligence had been carried out by Crown Agents and the final seal of approval given before the fire tenders arrived in the country.

Over the past week, many have argued that the acquisition of the Embraer 190 aircraft is not suitable for the purpose of acquisition as stated by Government, which is that it is a “strategic airlift aircraft” and that it will be utilised in particular to carry our troops to peacekeeping missions. Our checks show that the E190 is basically a commercial jet, which can be enhanced to executive jet status.

Any aircraft may be enhanced or customised to suit a purpose different from its original design. But at what relevant cost?

Another issue of concern that has come up is that of the cost of the aircrafts. Government is quoting a shell price of $55 million for the Embraer 190 and $17 million for the construction of a hangar for it. These quotations put out by Government appear to be in complete variance from that provided by the manufacturers themselves. The manufacturer quotes the unit price of the Embraer 190, whether enhanced to economy class and business or not, as ranging from $28 million to $40 million.

The construction of the Hangar is noted to be on the high side per the quotations put out by Government. The services of Ghana’s Institutes for Architects, Surveyors and Engineers can be employed to help evaluate the actual cost of the hangar construction in Ghana. Again proper due diligence reports may also question the wisdom in contracting two additional commercial loans (payable within 2 years with interest rates of some 6.5%) to pay for the 15 percent down payments required for each of the two transactions.

It is therefore necessary, for the interest of the Ghanaian taxpayer that Government pull the brakes for all these issues to be cleared up by an independent body within a short and reasonable period of time to ascertain the true cost and appropriateness of these acquisitions.

Signed

Sophia Kokor

Development Planning

Danquah Institute

020-7773109

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