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Financing Rural and Urban Roads with Road Fund

Financing Rural and Urban Roads with Road Fund. Presented by: George Afful Aidoo Acting Director, Ghana Road Fund. Order of presentation. Introduction Management of the road network Sources of funding Award of contracts Payment process Budgetary controls Auditing Challenges

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Financing Rural and Urban Roads with Road Fund

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  1. Financing Rural and Urban Roads with Road Fund Presented by: George Afful Aidoo Acting Director, Ghana Road Fund

  2. Order of presentation • Introduction • Management of the road network • Sources of funding • Award of contracts • Payment process • Budgetary controls • Auditing • Challenges • The way forward • Conclusion

  3. Introduction • The object of the Road Fund Act (536) of 1977 is to finance routine, periodic and rehabilitation of public roads in Ghana • The Fund is also to be used to assist the Metropolitan, Municipal and District assemblies in the exercise of their functions relevant to public roads under any enactment

  4. Introduction • The charges on the Fund are: • Routine and periodic maintenance of road and related facilities • Upgrading and rehabilitation of roads • Road safety activities • Selected road safety projects

  5. Management of the road network • Apart from the trunk roads, the management of the rural and urban roads in Ghana is currently undertaken by the Departments’ of Feeder Roads and Urban Roads respectively • Under Ghana’s decentralization programme, however, the management of rural and urban roads is to be undertaken by the Metropolitan, Municipal and District Assemblies in the long run

  6. Sources of Funding for Road Works • Road Fund • Dedicated for maintenance • Consolidated Fund • For development works, rehabilitation and upgrading • Donor Funds • Maintenance and development

  7. Planning, Programming and Budgeting • Road Fund Projects • The planning, programming and budgeting is done by the Road Agencies • The Road Fund Board approves of the programmes based on the projected revenue for the ensuing year • Each Agency is then given an approved budget for its programme for the ensuing year as part of the Road Fund budget

  8. Award of contracts • Contracts are awarded through competitive bidding for all projects in accordance with the procurement law • All maintenance works by the Department of Feeder Roads are awarded on contract to private contractors • For the Department of Urban Roads, about 95% of all maintenance works are awarded on contract with 5% done by Direct Labour in-house

  9. Payment Process for Work Done – Road Fund • The Agencies vet the claims of contractors and prepare payment certificates which are certified by the Regional, City or District Engineer • Routine Maintenance • Payment certificates are endorsed by the District Chief Executive • The audited payment certificates are submitted to the Head Office of the Agency for checking and approval • An approved list with the supporting audited payment certificates is then sent to the Road Fund Secretariat for payment

  10. Payment Process for Work Done – Road Fund • Periodic Maintenance • Payment certificates are endorsed by the Regional Minister • The payment certificates are submitted to the Head Office of the Agency for checking and approval • The approved payment certificates are then submitted for auditing • An approved list with the supporting audited payment certificates is then sent to the Road Fund Secretariat for payment

  11. Payment Process for Work Done – Road Fund • The checks done at Head Office are to ensure that: • The payment certificate is in order • The work done is to specification • Previous corrections have been effected • The attachments are all complete • Advance mobilization loan has been recovered • All measurements are accurate • Variation orders have been issued and approved

  12. Payment for Work Done • The checks done at Road Fund Secretariat are to ensure that: • payment certificates have been duly approved • Project is in the approved budget • there are no cost overruns • Original documents have been submitted • The attachments are all complete • Advance mobilization loan has been recovered or is being recovered

  13. Mode of Payment for Road Works • Road Fund • Payment is made directly into beneficiary contractors bank account based on the account details provided on the audited voucher • Consolidated Fund • Payment is effected through the Treasury • Donor Fund • 90% Payment is made directly into beneficiary contractors account based on the account details provided on the audited voucher and 10% (counterpart fund) paid through the Treasury

  14. Budgetary controls • Agencies are given details of their financial position monthly. The information includes: • Total budget for the year • Total Commitment as at the end of the month • Total amount paid to date • Outstanding bills unpaid • Total budget outstanding • Any over commitment is flagged and the Agency’s attention drawn to it

  15. Technical and Financial Auditing • The Financial Auditing of the Fund is done annually by external Auditors • The Technical Auditing is done continuously by external Auditors but a report is issued annually • The Secretariat also regularly monitors projects to ensure that work is actually done, the quality of work and workmanship are acceptable and there is no overpayment

  16. Challenges • Delays with the processing of payment certificates at the Agency level • Submission of wrong account details of contractors by the Agencies • Delays with the submission of payment advice and tax clearance certificates to contractors • Delays with the transfer of money to other banks • Delay in payment for work done • Cost overruns

  17. Challenges • Submission of double requests for payment by Agencies • Submission of photocopies instead of original source documents for payment • Over commitment of projects • Poor recovery of advance mobilization loan • Poor project preparation

  18. The way forward • There is the urgent need to control the award of contracts outside the approved programme • There should be prompt recovery of advance mobilization loan granted to contractors • Projects should be well prepared to avoid cost overruns due to variation orders • Encourage the monthly submission of invoices which could improve the cash flow of contractors • There should be prompt preparation of payment certificates by the Road Agencies • Budget controls need to be taken seriously

  19. Conclusion • The Road Fund still remains a major source of finance for road works in Ghana • The Road Fund can, however, play its role better if the rates associated with revenue generating instruments are revised regularly to ensure adequate revenue for 100% coverage of the maintenance needs in the long run

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