Tashi Dema

Among the 197 audit reports the Royal Audit Authority (RAA) issued from January 1 to June 30 this year, hydropower constituted the highest irregularities with Nu 2,130.6 million (M).

According to the audit report released on November 11, which will be deliberated in the upcoming Parliament session, Punatsangchu Hydro Electric Project I (PI) has not adjusted secured advances amounting to Nu 762.7M provided to a contractor involved in dam construction.

PI initially paid Nu 894.9M to the contractor, but only materials worth Nu 132.1M were utilised and adjusted.

The company had paid Nu 333.3M to a contractor to supply, transport, insure, erect, and commission generator transformer units and associated auxiliaries. It did not receive the supplies, even after extending the supply deadline by 1,279 days.

PI had also made payment of Nu 18.4 million in the contract for supply, installation, erection, and commissioning of a generating unit with associated auxiliaries, although the work had not yet been completed.

The company had also made excess payments of Nu 324.2M by erroneously computing labour charges on account of indirect chargers. It had applied net wages instead of basic wages while computing the hourly rate of labour components deviated and extra items of work in contravention to the CWC guidelines.

PI had allowed price variations on the contract amount without adjusting a 10 percent advance, which has benefitted the contractor by Nu 180.6M for supplies and Nu 26.8M for erection and commission charges, totalling to Nu 207.4M.

Incorrect computation of rebound wastage in PI also resulted in excess payments of Nu 9.5M, as the rate allowed to the contractor was higher than the applicable rate.

PI also did not claim a refund of Nu 51.2M from Bhutan Power Corporation and did not recover the cost of furniture amounting to Nu 16.3M issued to officials residing in furnished accommodations. It also did not deduct the applicable tax of Nu 298.5M from contractors involved in the design, supply, and erection of generating units.

Meanwhile, the RAA has observed total irregularities amounting to Nu 4,002.4M.

It pointed out Nu 367.1M in irregularities due to non-compliance with financial norms, which included Nu 60.8M in unreconciled non-revenue release obtained by the Zhemgang dzongkhag administration, Nu 58.7M in trade receivables lying outstanding for more than a year in contravention to the company’s credit management policy in Kuensel Corporation, and Nu 43.3M in unidentified deposits by the State Trading Corporation (STCBL).

The Tourism Council of Bhutan has Nu 77M in unadjusted advances made for the development of tourism products in various dzongkhags and gewogs, while the Department of Agriculture (DoA) had unadjusted advances of Nu 46.5M released for national organic flagship programme, national food security reserve, and the economic contingency plan against dzongkhags, research centres, the Food Corporation of Bhutan (FCBL), and the Farm Machinery Corporation (FMCL). The Department of Agricultural Marketing and Cooperatives has unadjusted advance payments of Nu 36.6M against FMCL and FCBL, released for school and hospital feeding programmes.

According to the RAA report, the Haa dzongkhag administration has unadjusted advances of Nu 11.3M lying against contractors.

It also pointed out that STCBL provided credit schemes to customers amounting to Nu 34.6M without obtaining bank guarantees as required in the credit policy, and the Construction Development Corporation (CDCL) carried out the sale of assets worth Nu 1.7M without following the company’s equipment management manual for sale of assets.

The RAA also pointed out that the Centre for Bhutan Studies and Gross National Happiness Research paid Nu 59.1M to install an underfloor heating system, which is not functional.

It also stated that Trashigang dzongkhag accepted defective urban water supply work worth Nu 34M, and Haa dzongkhag incurred a wasteful expenditure of Nu 12.1M to construct a farm road from Gelela to Setena.