Oct 31, 2016 News
– AG report
Auditor General, Deodat Sharma has uncovered yet again, more disturbing instances where contractors were overpaid millions of dollars for road projects.
In this case, Sharma noted that the amount of $1.220 billion was budgeted for in 2015 under the Government of Guyana Highway Improvement, East Coast Demerara Road Project which commenced in 2011.
He said that the project entailed the upgrading of the highway from Better Hope to Belfield; along with the necessary supervision.
Sharma said that the civil works component of this Project was separated and awarded in seven lots. He said that payments totalling $2.656 billion were made as at December, 31 2014, while payments totalling $95.575M were made during 2015. As at December 31, 2015, the total amount expended on this Project was $2.752 billion.
The Auditor General then pointed out in several instances, where overpayments took place, two of which included projects at La Bonne Intention to Beterverwagting and Beterverwagting to Triumph.
LOT 3 – LA BONNE INTENTION TO BETERVERWAGTING
Sharma in his latest report said that a physical verification carried out on Lot 3 revealed that the works were incomplete. He noted that there were changes or variations to the original scope of works.
In addition, the Auditor General also said that the site appeared to have been abandoned with no equipment or personnel from the contractor on site. He said that the contract completion date expired on June 17, 2015 and at the time of reporting, the position remained the same.
Furthermore, the Auditor General said that the contractor received three Advance payments totaling $264.123M. Sharma said that this represents 76% of the contract sum. He noted however that the contract only allows for an Advance payment of 50%. Sharma said that this is a breach of contract where the contractor was paid Advances greater than that which is allowed for under the contract.
At the time of reporting, the AG said that a valuation of the works completed was $157.663M. However, the actual payments made to the contractor totalled $278.346M. Sharma said that the contractor therefore received excess payments totaling $120.683M.
Ministry of Public Infrastructure explained that the works were completed. The Agency also stated that there was a variation to the contract that resulted in the construction of timber revetment on the southern side of the road.
Furthermore, the Ministry said that the contractor has received three Advance payments totaling $264.123M (which is 75.7% of the contract sum), while the contract only allowed for one advance payment of 50% of the contract price.
“However, the contractor provided advance payment bond covering the sum of $264.123M during the execution of the works, these bonds expired on the 31 October 2014. The agreed completed value of the works was $157.663M and the total payments made to the contractor were $278.346M, resulting in the contractor being overpaid amounts totalling $120.683M,” the Ministry stated.
It noted however that it has written the contractor many times requesting that restitution be made for the outstanding sum of $120.683M. To date the contractor has not repaid any of the amounts owed.
LOT 4 – BETERVERWAGTING TO TRIUMPH
Regarding this road project, the Auditor General said that works were incomplete and the site appeared to be neglected as well.
In highlighting another instance of overpayments, Sharma said that the contractor received three Advance payments of $209.603M, representing 65% of the contract sum, while the contract only allows for an Advance payment of 50%.
He stressed that this is a breach of contract where the contractor was paid advances greater than that which is allowed for under the contract. Further, the Auditor General said that the contractor submitted only one Advance Bond for the first advance payment of $174.504M.
He said that this Bond expired since 2014; and that no Bond was seen for the second advance payment issued to the contractor. He noted, too, that the Performance Bond expired on December 31, 2014.
Furthermore, Sharma pointed out that at the time of reporting, a valuation of the works completed was $76.954M. However, the actual payments made to the contractor amounted to $209.603M.
Sharma said that in this instance, the contractor received excess payments totalling $132.649M at the time of the physical verification.
The Ministry of Public Infrastructure explained that the contractor indeed received three advance payments totaling $209.603M. It however noted that the contract provided advance payment bond covering the sum of $209.603M during the execution of the works. The Ministry said that these bonds expired on October 31, 2014.
Additionally, the Budget Agency for the Ministry concurred with the AG’s findings that the agreed completed value of works was $76.954M and the total payments made to the contractor were $209.603M.
The Ministry said that it has written the contractor many times requesting that compensation be made for the outstanding sum of $132.649M. To date, the Ministry said that the contractor has not repaid any of the amounts owed.
The Audit Office has since recommended that the Head of the Budget Agency continues to pursue the matter with a view to recover the amounts overpaid.
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