Changes brought to the Public Finance Rules have allowed advance payments of up to 15 percent without a guarantee or security.
In February this year, the government amended rules to award projects to contractors without a bid security, performance guarantee or advance payment guarantee.
The recent amendments go against the principle of procuring goods and services through an open tender as envisioned in the Public Finance Rules.
There has been concern among the public that these changes, empowering the President and his cabinet to give projects to hand-picked contractors, could lead to corruption.
But the government had not responded to the concerns and did not say why the rules were changed.
The rules will be effective until February 26, 2027. This is a period of two years from the date of amendment of the Public Finance Rules.
In the past, the state faced millions in losses after projects were awarded without a guarantee or advance. The Auditor General has repeatedly recommended against such practices.
During the COVID-19 Pandemic, the state suffered a huge loss when the project to procure 75 ventilators was awarded to a Dubai company in the same manner.
MVR 30 million was paid in advance as 90 percent of the contract price under a special permission issued to the Health Ministry by the bid committee.
But the ventilators were not delivered. Recently, a court in Dubai ordered the company to pay USD 2.1 million to the Maldives state.
