A multi-billion cedi shopping mall joint venture project by the State Insurance Company (SIC) and the Social Security and National Insurance Trust (SSNIT) has come to a halt after billions of cedis had been sunk into it.

This follows the decision of SSNIT to desert the project, Metropolitan Malls Limited, in January 1999 after the contract had been awarded and construction work started with initial financial commitments from both partners.

About ?8 billion has so far been sunk into the project - SSNIT has paid ?945 million while the rest was paid by SIC. The outstanding works on the project as at 2001, were estimated at about ?31.9 billion, Mrs. Tawiah Addo-Ashong, company secretary confirmed this in response to The Chronicle's enquiry following a report of a forensic audit conducted by Sterling Financial Services and Morrison and Associates in July 2001. She said that an amount of ?7,949,096,770.07 has been spent to date on the project but works have been suspended and SIC and SSNIT are still holding talks on the matter.

The audit report said SSNIT pulled out of the contract half way through the project citing other financial commitments.

The Metropolitan Shopping Mall project is located close to the Makola Shopping Mall in Accra's central business district. The project began in the early 1970's but was suspended because of lack of building materials.

It was reactivated in 1998 with new designs - a four-storey ultra modern shopping mall complex with initial accommodation for offices and supermarkets as well as complementary underground storage facilities and parking lot for 64 cars.

The auditors revealed that no Joint Venture agreement was signed to regulate the relationship between SIC and SSNIT when the project was reactivated in 1998 and that SIC seemed to have over-relied on the promises of assistance by SSNIT.

The auditors recommended that SIC "should as a matter of urgency resume talks with SSNIT with the view to re-establishing the stalled arrangement for the construction of the market mall while SIC execute "new evaluation and feasibility appraisal of the project to establish its viability bearing in mind the altered circumstances of the project."

SIC and SSNIT formed Metropolitan Malls Limited with equity shares of 55% and 45% respectively. The project was to be funded with 40% equity contribution and 60% debt financing (loan) to be provided by SSNIT.

The report stated that among the reasons for which SSNIT decided to pull out of the project were that the loan had not been properly negotiated and that the interest rate should be 39%; the loan repayment and moratorium periods should be reduced from 13 to 10 years and three to two years, respectively.

Again, the project should be reappraised and a feasibility study report submitted for study; the project site was not suitable as it was located in a crowded area; the overall cost of ?15 billion could not make the project viable and should therefore be put at ?5 billion to make it viable and finally, unless a joint venture agreement was signed, SSNIT would not make any further payments.

The report indicated that, SIC board of directors has given approval for the contractors, Messrs Adolf Lupp, to assign the outstanding works to Messrs Construction Pioneers (CP). Severance payments of ?1.2 billion had been negotiated and settled with Adolf Lupp.

Meanwhile SIC is reported to be in negotiations for a loan of $5 million from Nedcor Investment Bank of South Africa for the project. A new feasibility report on the project undertaken by Messrs Panel Kerr Foster has also been completed at a cost of $17,050,00 and submitted to SIC management for study.