Public Works Ministry pays contractor over $40M in full to fix three stellings

Jan 21, 2022 News

Kaieteur News – The Ministry of Public Works, under the guidance of subject Minister, Juan Edghill, between November and December 2020 entered into three contracts, with the same contractor, to rehabilitate three Stellings across Guyana. Not only was one contractor awarded the projects to rehabilitate the Bartica, Supenaam and Parika Stellings, but he was also paid over $40 million in full, a clear breach of the contractual requirements.

The Parika Stelling

These were the findings of the Auditor General (AG), Deodat Sharma, in the Audited Report of 2020. According to him, the contracts to facilitate rehabilitation works to the Supenaam, Parika, and Bartica Stellings were entered into with the same contractor on 4 December 2020, 26 November 2020 and 30 November 2020, respectively. “The contracts required the provision of advance and performance guarantees of fifteen and ten percent, respectively, of the contract price,” the AG detailed.
A further 10 percent of payments were also to be retained to correct possible defects. However, the full contract sums were paid in December, even though the defects liability periods were six months.
As a result, the Audit Office noted that the Department would not have been in a position to levy on the retention sums, had the contractor defaulted. In fact, it was concluded by the AG that, “This is poor contract administration”.
The rehabilitation works for the Supenaam, Parika and Bartica Stellings were pegged at $24,508,000, $12,530,000 and $6,220,000 respectively, amounting to $43,258,000. The audit report also included another $900,000 expense for the Supenaam Stelling.
In response, the Head of Budget Agency stated that as it relates to the full contract sum being paid in December 2020, the retentions for Supenaam, Parika and Bartica were paid in December. However, the contractor had submitted bonds to cover the retention amount and defects liability period. As a result, the Ministry said it would have been in a position to levy on the retention, if the contractor defaulted.
For the year 2020, the sum of $58M was allotted for the rehabilitation of the Bartica, Parika, Kumaka, and Supenaam Stellings. The full sum was disbursed to the Transport and Harbours Department. During his examination of the records submitted by the Department, it was learnt that the sum of $56.385M were expended, leaving an unspent amount of $1.615M at the end of December.
“The unspent sum was retained by the Department. However, the $1.615M should have been refunded to the Consolidated Fund in keeping with Section 43 of the Fiscal Management and Accountability Act 2003, which requires all unspent balances to be refunded to the Consolidated Fund. As a result, the Appropriation Account of the Ministry is overstated by $1.615M,” the AG highlighted.
The Ministry in response to this finding, said “The Head of Budget Agency stated that including in the $1.615M is an amount of $643,000 on hold as retention which was scheduled to be paid in 2021 for the Kumaka Wharf. There was a six (6) months defects liability period which would have expired on August 5, 2021”.
It went on to assure the Auditor General that every effort would be made in the future to have all unspent monies refunded into the consolidated fund at the end of the fiscal year.
The AG in his 2020 report also included that the sum of $99.435 million was expended on the rehabilitation of the Leguan Stelling in 2019.The document explained that a special investigation was being conducted into the rehabilitation of the Stelling. According to the Ministry, the $99.435 million that was expended on the Rehabilitation of Leguan Stelling in 2019 has been recouped based on the contractor’s works executed to date.