[ 2016-09-23 ]

Aveyime Rice Project dead; Over 500 workers sent home without pay

No one needs to be told on entering the yard of
Volta Prairie Limited (VPL), formerly known as the
Aveyime Rice Project at Aveyime, Battor, in the
North Tongu District in the Volta Region, that the
project is dead.


Apart from the lifelessness that meets the
visitor, the sight of rusty broken-down tractors
and other equipment only fit for scrap tells it
all.

It is as if the rice project, which was at the
onset in 1997 embroiled in the Quality Grain
scandal has been doomed to fail or is under a
curse, since an attempt to revive it in 2007 with
the coming in of Volta Prairie Limited (PVL), has
also hit a dead end.

The primary cause of the state of affairs at the
once-vibrant rice producing company is the years
of neglect by the largest shareholder in the
project – the government.

After the initial investment of Prairie Texas
Incorporated (PTI) of the United States of
America, which saw the employment of 200 permanent
staff and between 300 and 400 casual staff and the
company back on its feet, the lack of further
investments by the government, coupled with
unfulfilled promises and misfortunes have once
again crippled the project, which has the
potential to cater for all the rice needs of the
country and even export a surplus.

These came to light when the Daily Graphic went on
a fact-finding mission to PVL.

Background

PVL is a joint venture company between a
USA-registered company Prairie Texas Incorporated
(PTI) and the Government of Ghana, which was
agreed in a memorandum of understanding (MoU)
signed by the two parties on May 16, 2007.

By the agreement, PVL, the managing partner, owns
40 per cent shares in the company, while the
government, the majority shareholder, owns 60 per
cent through the Ministry of Food and Agriculture
and the GCB Bank.

The company owns 1,250 hectares of land in the
Central Tongu District in the Volta Region, of
which 750 hectares has been cleared and 710 fully
irrigated. PVL also holds lease rights from the
government and the local community to a further
6,000 hectares.

With its current 770 hectares, PVL can produce a
maximum of 7,000 tonnes of paddy rice a year,
which is about 12 per cent of the installed
capacity of its 1997 mill which is in need of
major refurbishment or better still must be
replaced with a more modern and efficient mill.

Investment gone waste?

A tour of the facilities at the company’s site
showed a huge investment that had been allowed to
go waste as a result of a plethora of issues, the
main one being the lack of capital injection and
the failure of the bank to release the larger
chunk of an agreed loan to revamp the project.

Taking the Daily Graphic team round, the General
Manager of PVL, Mr Kojo Osae-Addo, said most of
the machinery were 20 years old and needed
replacement for utmost production.

Maize silos with a capacity of 10,000 metric
tonnes bought during the Quality Grain era had to
be retrofitted for rice but they still break the
rice because the conveyors are not designed for
the rice but for maize.

Large drying silos which were not complete when
they were brought in are sitting idle and going
rusty although some employees from the Takoradi
Polytechnic are ready to use their know-how to
build a heating system to make them usable.

Other big silos and equipment for de-husking,
cleaning, polishing and bagging the rice are all
idle, rusting away or gathering dust.

An agriculture aircraft (Agcat) with 450 horse
power is also sitting idle and rusting away
because of inactivity and would need funding for
thorough servicing if it is to be used again.


According to Mr Osae-Addo, engineers were going to
be sent to Arkansas, where the aircraft was
manufactured, for six months to learn how to
service, strip and rebuild a second aircraft for
US$150,000 but all that did not materialise
because of the dire straits of the company.

He disclosed that a previous aircraft crashed the
first day it took off because it had not been used
for a long time but fortunately the pilot
survived.

There is also a 90,000 litre underground fuel tank
on site for fuelling tractors and other equipment,
which will last for about one and half to two
months (a season is about four months).

Adding to all that, almost 800 hectares of land
that was prepared with several irrigation canals
are not only lying fallow; some have been
encroached on while others have been compacted by
large herds of cattle belonging to indigenes which
graze on the land.

The cattle have also damaged most of the canals
that were created for the rice so while the land
would have to be ploughed again, the canals would
also have to be recreated if rice cultivation
would be resumed.

Meanwhile, developing a one hectare rice field
could cost between $2,000 and $5,000 depending on
the capacity of the field.



Loan facility truncated

Mr Osae-Addo explained to the Daily Graphic team
how after an initial loan of US$4.6 million was
granted by the Agricultural Development Bank (ADB)
in 2011 out of a total request of US$9.6 million,
the promise of a top up once agreed benchmarks
were reached never materialised.

He said although the US$4.6 million was used
judiciously with 60 per cent (US$2.6 million)
going into the purchase of needed equipment such
as tractors, new rice polishers and spare parts to
refurbish existing machinery, and two Nissan
pickup vehicles, while the remaining 40 per cent
was used to prepare the land, buy seed, other
inputs and to pay salaries, approximately GH¢3
million was still lost in revenue.

Mr Osae-Addo said the loss, despite the best
performance of the farm in 2012, was due to the
unavailability of combine harvesters because of
the theft of parts and the ADB’s refusal to
advance US$50,000 for the emergency importation of
parts from the USA.

“The loss of the GH¢3 million in revenue and
ADB’s failure to honour its commitment to top up
the loan amount are the straws that broke the
camel’s back,” he said.

Stretched negotiations

Mr Osae-Addo explained that following the problems
of the post-2012 operations, PVL continued
negotiations with ADB for the bank to honour its
top-up pledge, which culminated in ADB approaching
KfW (the German government), funded Out-growers
Value Chain Fund (OVCF) to provide additional
funds.

“The terms ADB was insisting on were not
favourable to PVL and its small out-growers. In
essence ADB was using the OVCF to refinance the
existing PVL loan with only an additional GH¢1.67
million in working capital,” he narrated.

According to Mr Osae-Addo who was appointed the
General Manager of PVL by its board in 2013 when
work was at a standstill, it was after eight
months of negotiations that the ADB finally agreed
to provide additional funding over and above the
OVCF facility, only on the findings of an
independent business review that would be
conducted by KPMG, a global network of
professional firms providing audit, tax and
advisory services.


After a report was issued by KPMG on their
findings and an agreed operational plan between
PVL and ADB, operations were restarted in April
2014 with the agreement that PVL would sign and
utilise the funding under the OVCF agreement,
while ADB would provide supplementary funding of
GH¢5.6 million over two years under a five-year
loan agreement.

But in a bizarre manner, “as soon as the
GH¢1.67 million of the OVCF facility was
disbursed in May 2014, ADB informed PVL management
that there would be no further disbursements from
the agreed supplemental facility because it (ADB)
had a pari passu issue with Ghana Commercial Bank,
a PVL shareholder,” Mr Osae-Addo said.

He described the action of ADB as “bait and
switch” meaning they had not been truthful to
PVL at the onset, saying the action of the ADB put
in jeopardy 131 hectares of rice that had been
planted then.

“With funding for refurbishing the dilapidated
equipment not forthcoming, PVL’s management had
to improvise and plant as much of the new
foundation seed it had purchased back in December
2013 with OVCF funds as quickly as possible before
it went bad. PVL’s management was able to plant
203 hectares of the planned 350 hectares through
the rainy season,” he stated.

Mr Osae-Addo, however, added that as PVL was
getting ready to harvest, ADB settled its pari
passu issue with GCB in July 2014 and released
GH¢940,000 to PVL for parts for the combine
harvesters, salaries and other costs but the
amount was far lower than the GH¢2.6 million
prescribed for the first year - that was
prescribed by the KPMG report as the minimum
amount required to ensure continuous operations.

Source - graphic.com.gh

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