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Oct 16, 2016 News
A number of contractors reportedly owe the government in excess of $300M in overpayments for works done on the East Coast Demerara highway improvement project.
This is according to the Auditor General’s Report on the public accounts of Guyana for the fiscal year which ended December 31, 2015.
For Lot One – Better Hope to Montrose, a contract valued at $468.215M was awarded for preparatory works. The contract was terminated by then Ministry of Public Works, now Ministry of Public Infrastructure on July 31, 2012. This was done after a breach in the contractual obligations by the contractor.
As of September last, the audit stated that there was no evidence to confirm that the Ministry was able to recover the sum of $81.570M which represents the contractor’s indebtedness. This amount was arrived at after a valuation was done at the time of the contract being terminated in accordance with Clause 15.3 of the contract.
According to the audit, the contractor had sued the government for wrongful termination and the matter is still before the court.
Overpayments were also found to be outstanding for work done in Lot three – La Bonne Intention to Beterverwagting. The report said that upon doing a physical verification of the area, works remained incomplete and that there were changes to the original scope of works.
The contract for Lot three saw the company receiving three advance payments totalling $264.123M which represents 76 per cent of the total contract sum. However, the audit noted that the contract only allowed for a 50 per cent advance payment. This was a severe breach of contract.
The audit office’s physical valuation revealed that the work done was worth $157.663M. However, the contractor received $278.346M for the project. Hence, the contractor received excess payment of $120.683M.
According to the report, the contractor submitted Bonds for the respective advance payments and they expired in 2014. As a result of the expiration of the Bond, the Ministry is now dependent on the contractor to repay the outstanding amounts. To this date, the contractor has not repaid the money to the state.
In Lot four – Beterverwagting to Triumph, the audit reported that works in the area were incomplete and the site appeared abandoned.
The contractor received three advance payments of $209.603M which is 65 per cent of the contract sum. Similar to the other contracts, only a 50 per cent advance payment was permitted. Added to that, the contractor, Compustruct Engineering, only submitted one advance Bond for the first payment of $174.504M.
This Bond expired in 2014 and no Bond was seen by the auditors for the second advance payments issued to the contractor.
At the time of reporting, the completed work was valued at $76.954M. The total payments made to the company amounted to $209.603M. Thus, the overpayment totalled $132.649M.
The Audit Office has recommended that the Head of the Budget Agency should continue to pursue these matters in order to recover the amounts overpaid.
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