Several major infrastructure projects under the Ministry of Public Works experienced setbacks due to delays in finalizing loans and other issues.
The Auditor General’s report on the Public Accounts for 2022 cited a number of cases including the New Demerara River Crossing.
The report tabled in Parliament recently said that the sum of $21.1b was provided last year for the New Demerara River Bridge and according to the appropriation accounts the full amount was expended as at December 31, 2022.
“However audit checks revealed that amounts totalling $8.327 billion were expended while the sum of $12.673 billion was transferred into an Escrow Account held at the Bank of Guyana.
The ministry’s response was that the signing of the loan encountered several delays which resulted in the project’s counterpart funds not being utilised as intended. However, a request to open a project account was made on December 29, 2022 and this was approved and the funds were transferred to this account to facilitate progress payments.
The US$260 million contract between the government and China Rail-way Construction Com-pany Limited (CRCCL) was signed on May 25th last year.
The signing came after months of technical and financial negotiations with CRCCL and their partners, China Railway Construc-tion (Caribbean) Company Limited, and China Rail-way Construction Bridge Engineering Bureau Group Company Limited, who tendered for the project in a joint venture.
With respect to the highway improvement on the East Coast, the audit office said that there was an unspent balance of $8b at the end of 2022.
The sum of $1.323b was provided for the upgrading of the railway embankment road from Sheriff Street to Enmore, construction of a railway embankment road from Enmore to Orange Nassau, construction of a four-lane highway from La Reconnaissance to Mahaica and a feasibility study and designs. A supplementary allocation of $7.24b was made increasing the total amount available to $8.567b. However only $566.3m was spent.
The Head of the Budget Agency said that the contract for civil works was signed on September 30, 2022 for US$192.3m for the project. On December 30, 2022, Guyana and China signed a Framework Concessional Loan Agree-ment for the project. The loan agreement as at December 31st was not signed and one of the conditions of the civil works contract was that the contract becomes effective upon the signing of the loan agreement.
“As a consequence, the advance payment could not have been paid in 2022. The advance payment was 20% of the contract price which is equivalent to $8.077b”, the budget agency noted.
As it relates to the Linden-Mabura road upgrade in a project with the Caribbean Develop-ment Bank (CDB), the sum of $6.005b was assigned for the project. A supplementary allotment of $938m was voted by Parliament. A total of $6.498m was expended, resulting in an unspent balance of $4445m.
The Head of the Budget Agency explained that the shortfall in spending was because the ministry was expected to sign the long-term contract. However, there was a delay in the agreement which “stemmed from the extensive review of various clauses”. The long-term contract was signed in July this year.
Haags Bosch
In relation to the East Bank-East Coast road linkage in an India-financed scheme, the Auditor General’s report said that the sum of $2.35b was allotted for the Ogle to Haags Bosch project. A supplementary allotment of $2.6b increased the total funds available to the project to $4.95b. According to the Appropriation Accounts, amounts totalling $4.852b were expended resulting in an unspent balance of $102.5b. The audit office noted that in 2021, the delay in the selection of contractors led to an expenditure shortfall of $1.05b.
In response, the head of the budget agency said that the contract for civil works was signed on June 24, 2022 for US$106.3m. The commencement order was issued with the effective date being October 7, 2022 and a scheduled completion date of October 6, 2024. During the report period, the budget agency said that the contractor received the mobilisation advance payment and the first interim payment. The shortfall of $102.5m was as a result of the contractor being “faced with difficulties in expediting the clearing and grubbing activities, primarily due to heavy rainfall in November and December”,
In relation to the Schoonord-Parika Road, the Auditor General’s report said that the sum of $165m was allotted for: geotechnical investigation, environmental and social impact assessment (ESIA) and clearing of the alignment; and design and construction of the highway.
The ministry expended only $65m of the sum available resulting in an unspent balance of $100m. The Head of the Budget Agency said that the $100m unspent was for the ESIA and construction of the highway.
“These consultancy services were to be implemented once the negotiations were completed with the successful consultants…negotiations were not completed in 2022, and as such the sums were unspent”, the report said.
For the Linden-Soesdyke Highway, the Auditor General’s Report said that the sum of $2.956b was apportioned for its reconstruction along with related structures. However, according to the Appropriation Accounts amounts totalling $99.977m were expended resulting in an unspent balance of $2.496b.
“Given the shortfall in expenditure, it was clear that the Ministry was unable to improve the physical infrastructure as intended”, the report added.
The ministry in response said: “Delays in the Loan negotiations with Islamic Development Bank, resulted in the non-procurement/contract as at 31 December 2022, which was the cause for the balance highlighted. The local counterpart funds of $99.977m were expended to do asphaltic paving and other emergency repairs along the Linden Soesdyke Highway, until the final award of the contract”.
The highway from Diamond to Timehri also experienced similar issues. The sum of $2.280b was allocated for studies and the construction of the highway. According to the Appropriation Accounts, only $100m was expended, leaving an unspent balance of $2.18b.
The Head of the Budget Agency in response said that the $2.280b was allocated as part of the government’s local contribution to a loan for the rehabilitation of the Grove to Timehri stretch.
“However, it should be noted that in April 2023, tripartite discussions commenced between the Ministry of Finance, Inter-American Development Bank (IDB) and the Ministry of Public Works for the financing of a loan…Discussions were completed and on 26 October 2022, the loan was approved by the IDB. The loan was signed on 06 March 2023, and the tendering process for the award of contracts for the civil works contractor and a supervision consultant commenced on 20 March 2023. Therefore, it should be noted that the funds allotted in 2022 could not have been expended, as the contract was not in place”, the budget agency said.
This explanation by the ministry will raise serious questions as to why optimistic budgetary projections are being made when loan negotiations are far from concluded.
An artist’s impression of the new Demerara Harbour Bridge (Ministry of Public Infrastructure rendering)
