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Business & Finance | Feb 15, 2005

Road contractors urged to explore mergers

GNA

Accra, Feb. 15, GNA - Road contractors should explore the option of mergers and joint venture arrangements to enable them to attain the level of competence required to compete with foreign contractors, the Minister of Road Transport, Mr Richard Anane said on Tuesday.

He said such mergers, either permanently or joint ventures on a project-by-project basis, had the potential of succeeding within a well defined and properly structured arrangement

"The options will enable our contractors to meet pre-qualification criteria of the major funding agencies and make them more competitive," he said in a speech read for him at the opening of a capacity building workshop for road contractors in Accra.

Dr Anane added: "The current state of affairs where every small company is trying to compete on its own strength in this highly competitive market would keep our local contractors on the fringes of the industry".

The two-day workshop organised by the Association of Road Contractors, Ghana (ASROC), is on the theme, "Strengthening Of The Ghanaian Economy By Promoting Small And Medium Sized Enterprises Of The Building And Construction Industry".

It is a follow-up to activities of the private-public participation network, which the Ghana road sector started in 2002.

The planning workshop, aimed at erasing the words "shoddy works" in future contracts, is being attended by staff of road sector Ministry, ASROC, Ghana Highway Authority, Association of Ghana Industries, Ghana Institute of Engineers and representatives of Ghanaian entrepreneurs.

InWent, a German organisation for international human resource development, advanced training and dialogue, is sponsoring the workshop. Dr Anane said the construction industry contributed an average of 7.5 to 8 per cent per annum to the country's Gross Domestic Product. He said, however, that inadequate capacity was not only limited to human resources, particularly the technical personnel available in the industry, but also inadequate and inappropriate plant and equipment, poor planning and financial capacity of local contractors.

The Minister said as a result local contractors were unable to execute contracts awarded them on schedule and to specifications. This, no doubt, explained the many abandoned roads and bridge projects and some poor quality works executed by local contractors, he added. The effect is the inability of the taxpayers to get value for money and to drive on good quality roads.

Dr Anane said the ministry had discussed with ASROC over the years the issue of contractor equipment capacity. "We have explored arrangements from a number of sources for the acquisition of equipment on hire purchase for the members of the Association."

He said expressed the hope that discussions with financial institutions would soon be completed so that the ministry would procure the necessary equipment for contractors.

Mrs Dorothea Groth, Counsellor for Development Cooperation at the German Embassy in Accra, said about 80 million Euros was committed to ongoing and future projects.

Example are the rehabilitation of the coastal highway Tema-Sogakope-Akatsi, the ongoing road programme in the Brong Ahafo and Ashanti regions as well as planned programmes for the construction of feeder roads in the Brong Ahafo.

She said Ghana was a priority partner country for German cooperation saying, since 1960 an amount of 950.5 million Euros had been committed for bilateral projects and programs in financial and technical cooperation in addition to the German contributions to the European Development Fund.

Mrs Groth said sustainability of road infrastructure depended on a firm policy framework with principles, such as building of new roads not as substitute to road maintenance, reasonable good road network depends on coherent policy concerning axle load control and paying of contractors in time.

Mr Jonas Twumasi-Mensah, Chairman of ASROC, said the Association's involvement in the workshop was a testimony that Ghanaian contractors had moved from the age of discrimination, isolation and segregation by some society members to one of honour, dignity and great reverence. He said problems confronting the contractors centred on capital, heavy equipment, reliable operators, experienced engineers, technicians and qualified management personnel of high and middle level calibre.

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