A project to establish water and sewerage services in Fuvahmulah cost MVR 56 million in excess of the budgeted amount due to the actions of successive governments, the Auditor General’s office has said.
The Fuvahmulah water and sewerage project was devised in 2012 with an MVR 160.7 million loan from the Kuwait Fund for Development with the rest to be covered by the state’s Public Sector Investment Program (PSIP) budget. Work began four years later in 2016 and the project was completed in 2019.
According to a performance audit of the project published by the Auditor General’s office, the agreements stated that the project would cost MVR 282.6 million. But a total of MVR 339.9 million was spent due to various problems faced in executing the project.
MVR 20 million extra due to poor coordination
The Fuvahmulah water and sewerage project was carried out under the supervision of the Environment Ministry by a special project management unit.
The Environment Protection Agency (EPA) gave conditional approval to the project’s detailed design report, according to the audit report. In its approval, the EPA asked for revisions to the report with important changes proposed by the EPA along with additional information.
But as a result of the Environment Ministry’s failure to ensure that the revisions were made, measures planned to maintain the project’s quality during the planning, design and execution stages were not implemented, the report stated.
Auditors also flagged four months where no institution coordinated work on the project as well as the failure to properly maintain important documents related to the project.
Parts of the project’s work were inspected and approved by a party that was not licensed by the Environment Ministry and some parts of the work were not inspected at all.
As a result of these problems, MVR 20.2 million was added to the project’s cost and an additional six months was spent for completion.
Performance certificate issued to contractor despite problems, MVR 43 million to fix
The contractor of the Fuvahmulah water and sewerage project was Sri Lanka’s Sierra Construction company.
According to the audit report, monitoring and evaluation efforts during the defects liability period - which was intended for identifying and resolving problems with the systems - were not properly carried out.
During the period, there was no specific institution for coordinating the project for three months, the audit found, and Fenaka did not participate in its capacity as the system operator during the defects liability period.
The EPA issued a temporary permit for Fenaka to operate the system on December 13, 2018. But Fenaka was not doing the work at the time. When the issue was noted by the consultant, the Environment Ministry did not take any action apart from sending an email to Fenaka.
No further action was taken despite the Fuvahmulah City Council informing the Environment Ministry first and then the Planning Ministry later. Despite issuing a permit, the EPA did not take any action or impose a fine on Fenaka over the failure to operate the sewerage system, the audit report noted.
Leakage of excrement due to the water and sewerage system’s vacuum chambers and manholes filling up was noted during the defects liability period. But the Planning Ministry determined the project to have been completed without instructing the contractor to fix the problems.
An additional MVR 43.2 million needed to be spent to resolve the issues but the audit report noted that the cost should have been borne by the contractor.
Other issues flagged in the audit report:
- Failure to take action despite setting up a sewage outflow pipe and the vacuum station of the sewage treatment system in an unauthorized area in violation of the environment impact assessment (EIA) report
- Absence of facilities at Fenaka for adequately operating water and sewerage systems and the lack of adequate efforts to establish such facilities
- Work on pumping out manholes and vacuum chambers was contracted to a private party without bidding and MVR 8.6 million was spent over 21 months
- Failure to collect funds due as income and failure to ascertain the cost of operating and maintaining the system due to Fenaka not preparing and submitting a mandatory report on the state of finances
- Despite the contract stating that the water system could produce 1,500 cubic meters daily, the system could only produce 532 cubic meters.
As corrective measures, the Auditor General’s office recommended strengthening the supervision and monitoring system for such socially and economic important state-funded projects, properly maintaining documentation and regulators taking action through established processes.
