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Road Development Authority Constitution of the Democratic Socialist According to the accounts presented to Republic of Sri Lanka. audit by the Authority for the year under review, debtor balances totalling Road Development Authority Rs.3,014.91 million not recovered from various parties by the Authority during a period from 1 to 10 years as at 31 The cadre of the Road Development December 2014 and creditor balances Authority consisted of 5,964 officers totalling Rs.1,492.38 million not paid by including 79 officers in the top level the Authority during a period from 1 to management, 651 officers in the 10 years had not been settled even Engineering Service and 886 officers in the during the year under review. Technical Service. According to the financial statements as at 31 December 2014, the Approval of the Cabinet of Ministers had deficit of the Authority amounted to been granted to obtain loans amounting Rs.4,962.67 million and a provision of to Rs.151.77 billion from local banks for Rs.21,432.6 million had been made by the the rehabilitation of 64 roads with a General Treasury for improvement and length of 1,434 kilo meters which comes maintenance of roads. The income under the Road Development Authority. collected from the expressways during the Accordingly, contracts valued at year 2014 amounted to Rs.3,156.4 million. Rs.137.52 billion had been awarded for the rehabilitation of 64 roads, and Construction, rehabilitation and the total loans obtained in cash from 07 maintenance of expressways, highways and local banks during the years 2012,2013 bridges are being carried out by the Maga and 2014 for the rehabilitation of those Neguma Emulsion Production Company, roads amounted to Rs.108.25 billion. Maga Neguma Road Construction and Even though contractors should be Equipment Company and Maga Neguma selected in accordance with the National Consultancy and Project Management Procurement Guidelines, these contracts Company which established as associate had been directly awarded on the companies under the Road Development quotations submitted by the contractors. Authority and the Companies Act and the Nevertheless, it was observed that the projects implemented on domestic and quotations submitted were higher than foreign funds which executed by the the standard road rates. Out of the Ministry and the Road Development contracts awarded, the contract value of Authority. The significant audit observations Rs.146.55 billion relating to 54 roads made during the year under review are recommended by the Technical summarized below. Evaluation Committee of the Ministry had been increased by Rs.9.24 billion by AUDITOR GENERAL’S DEPARTMENT ANNUAL REPORT OF THE AUDITOR GENERAL – 2014 125 the Procurement Committee appointed Rehabilitation of the Authority by the Cabinet of Ministers. commenced during the period 2006- According to the above credit limit 2014 by the Engineering offices of the approved, the credit limit approved by Road Development Authority of which the National Savings Bank had been the estimated contract value amounted Rs.55.37 billion. Further, a sum of Rs.28 to Rs.5,891.05 million. Nevertheless, it billion had been obtained by the Road was observed that the activities of those Development Authority for the projects had been stopped halfway due rehabilitation of 28 roads under the 64 to the delay of contractors, poor road contracts awarded as mentioned performance, shortages of funds and above, and those money had been spent being non-RDA roads. by the Authority and the Ministry on activities extraneous to the rehabilitation Even though a provision of Rs.493.83 of roads. Nevertheless, approval of the million had been made by the Annual Cabinet of Ministers and the Treasury Budget for the maintenance work of had not been obtained in this 186 roads included in the Maintenance connection. Programme of the year 2014, such maintenance work had not been carried Action had not been taken to utilize a out. Nevertheless, a sum of Rs.1,248.14 provision of Rs.16,238 million made in million had been spent on the respect of widening and improvement maintenance work of 281 non-RDA of 141 roads during the year 2014. roads despite the non-availability of Nevertheless, a sum of Rs.2,757 million budgeted provision. had been spent on 33 roads not included in the Annual Action Plan, despite the Action had not been taken even during non-availability of provision. Further, a the year under review to recover a sum sum of Rs.38,519 million had been spent of Rs.63.27 million recoverable in respect on widening and improvement of 900 of assets, materials and spare parts given non-RDA roads. Nevertheless, it was to the Maga Neguma Road Construction observed that the progress of widening and Equipment Company by the Road and improvement of 61 RDA roads and Development Authority during the 234 non-RDA roads costing Rs.5,319 period 2004-2007 and motor vehicle rent million and Rs.16,503 million amounting to Rs.488.86 million respectively had been below 50 per recoverable in respect of motor vehicles cent as at 31 December 2014. given to Maga Neguma Companies during the period 2008-2013. Further, 20 A sum of Rs.705.39 million had been motor vehicles given to Maga Neguma spent on 50 Projects for Road Companies but in unserviceable AUDITOR GENERAL’S DEPARTMENT ANNUAL REPORT OF THE AUDITOR GENERAL – 2014 126 condition had not been returned to the of Outer Circular Roads during the year Authority. under review had not been utilized within the due period. Thus, a Even though payments should be made Commitment Charge amounting to after submitting the bills and Rs.803.94 million had been recovered by measurements of work done, the that Lending Agency. Authority had granted advances amounting to Rs.6,126.37 million to the Three projects established for the Maga Neguma Company during the year construction of roads on foreign and under review without checking the domestic loans had spent a sum of Rs. measurements of work done and bills in 161.33 million on activities extraneous to 55 instances. the objectives of those projects during the year under review. Further, another Ministry of Highways and such 10 projects had incurred an Investment Promotion – Projects (on expenditure of Rs.1,542 million out of the funds of those projects on Foreign Loans and Domestic Funds) uneconomic purposes. A sum of Rs.10,068.30 million had been The contract had been awarded on the paid as compensation for 1,165.4 condition of ensuring the quality of the hectares of land acquired with regard to constructions of the Colombo Outer 06 projects during the year under Circular Project I by the contractor review, while the payment of himself. Nevertheless, it had not been compensation has delayed. Thus, an properly fulfilled by the contractor, thus interest amounting to Rs.1384.97 million an expenditure amounting to Rs.7.22 had been paid. million had been incurred by the Project to maintain the quality of the In addition to the initial contract cost of constructions during the year under 10 projects for the construction of review. expressways and other main roads which established by utilizing foreign and Bills payable to the contractors of 05 domestic funds, a sum of Rs.4953.83 projects had not been duly paid, thus million had been allocated during the liquidated damages amounting to year under review by 166 Variance Rs.204.09 million had to be paid Orders deviating from the relevant therefor. Approval Procedure. Recruitment of the staff to all the The money allocated by the Lending projects established on foreign and Agency for the utilization of 02 Projects AUDITOR GENERAL’S DEPARTMENT ANNUAL REPORT OF THE AUDITOR GENERAL – 2014 127 domestic loans under the Ministry had awarded to the above contractor on 23 been made contrary to the Circular No. November 2011. According to the 33 of 05 April 2007 of the Department of information made available, the Management Services. Further, the Engineer’s Estimates or the quotations payment of salaries had also been made submitted for the price reduced bid had based on a circular issued by the Road not been approved by the Supervision Development Authority contrary to the Consultant and the Technical Evaluation above Circular. As such, allowances and Committee. Nevertheless, that bid salaries had been overpaid to the project submitted after being revised had been officers. approved by the Cabinet of Ministers on 15 February 2011. Constructions valued at Rs.46,925.40 million pertaining to 02 projects had The pipes and fittings purchased at a been awarded deviating from the Tender cost of Rs.84 million by the Project Procedure during the year under review. before two years for the reinstallation of Further,11 consultants for Primary pipe systems belonging to the Water Education activities had been recruited Supply and Drainage Board in the roads by spending a sum of Rs.119.26 million widened and improved by the Road from one project deviating from the Sector Assistant Project had remained Tender Procedure. idle in the stores of the Project without being used even as at the end of the year The bid valued at Rs.62.041 billion 2014. Further, the National Highway submitted by the contractor in respect of Sector Project had spent a sum of the constructions of the road from Rs.74.8 million on the reinstallation of Kaduwela to Kadawatha (8km) ( Stage II) pipe systems belonging to the Water had exceeded the Engineer’s Estimate Supply and Drainage Board and Local amounting to Rs.31.334 billion. Thus, the Government Institutions.
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