… auditors raise issue with undue payment

Tshering Palden

Construction work to supply water to Damdum Industrial Park in Samtse which was supposed to complete on March 16, 2018 has been left incomplete despite time extension after the contractor abandoned the work.

Royal Audit Authority (RAA) after a financial audit of the 2018-19 financial year found that the project management had made undue payment to the contractor and failure of the contractor to complete the work for the construction of water supply at Dhamdum Industrial Park, Samtse amounting to Nu 14.96 million (M). 

The RAA report stated that while the actual value of work done was Nu 24.08M the contractor was paid Nu 38.79M which was excess payment of Nu 14.71M.

“This indicated that there had been no proper monitoring over the running account bills submitted by the site engineer, thus construing undue financial benefits extended to the contractor without execution of the work,” the auditors stated.

“The contractor was favoured with the undue payment of Nu 14.71M for which commercial interest must be imposed until such time the amount is made good from the contractor.”

The total liability against the contractor amounting to Nu 14.96M should be recovered from the contractor at the earliest and deposited with the RAA. “Besides, action must be taken for excess payment to the extent of Nu 14.71M against the officials responsible for the lapses,” the audit report stated.

The RAA also noted that the industrial activity at Dhamdum was hampered for want of water supply.

The Department of Industry (DoI) in its response stated that on the directive from the Ministerial Tender Committee the contract was terminated on July 18, 2019 because there was no work progress for many months after the time extension.

The project office made several attempts to contact him but he went missing. Then the department forwarded the case for arbitration to the Bhutan Alternative Dispute Resolution Centre (BADRC) and it is yet to hear from the centre on the ex-parte arbitration according to the department’s response to the auditors. “Regarding the infrastructure constructed for the water supply scheme, since the work is not completed, the department had officially not taken over the work from the contractor.”

The work will be carried out by Construction Development Corporation Ltd (CDCL) and a memorandum of understanding (MoU) between the department and CDCL was signed on November 18 last year.

An agreement for redesign of the water supply system was made on January 15, 2020 and an award letter was issued on the same day.

The RAA cautioned the department to make use of the infrastructure already in place to ensure the wastage on account of the expenditure incurred on the construction of water supply works is minimised to the best possible extent under intimation to RAA.

The RAA reviewed the response and evidence provided by the project management and dropped 11 out of the 16 audit findings.

In another financial audit but of similar nature, the RAA also found incomplete work despite time extensions and outstanding liability for water supply at Jigmeling Industrial Estate, Sarpang amounting to Nu 4.30M. The contractor has filed a case against the industry department at the BARDC.

The RAA report stated that the industrial activity was not picking up at Jigmeling apparently for lack of water supply.

The audit report was released last month to the heads of relevant agencies.