Auditor Reprimands Water Ministry for Cost Overruns


Ministry was asked to justify 13.6 billion Br in inflated costs for two irrigation dams




The Auditor General confronted the Ministry of Water, Irrigation & Electricity over the inflated costs of the Zarema Mayday and Megech irrigation dams, which have reached a total of 13.6 billion Br together.

Gemechu Dubisso, the auditor general, reported the inflated aggregate cost of the two irrigation dams to the State Expenditure Administration & Control Affairs Standing Committee, which called a briefing session in parliament on January 9, 2019.

Questions were raised at the session by the Auditor General, members of the Standing Committee and teams from the Federal Ethics & Anti-corruption Commission, the Ministry of Finance, the Public Procurement & Disposal Administration and the Planning & Development Commission.

Abraham Adugna (PhD), state minister of Water, Irrigation & Electricity, and Kamil Shemsu and Engdasew Zerihun, coordinators of the Zarema and Megech, respectively, defended the findings of the report.

The audit report stated that the construction of the Zarema Mayday Irrigation Dam in Tigray Regional State, which is a part of the Welkayt Sugar Mill project, was launched seven years ago by the Ethiopian Sugar Corporation without sufficient design, environmental assessments or pre-feasibility studies.

It also asserted that the contractor, Sur Construction Company, and the consultant, Studio Galli Engineering, were assigned to the project without passing the proper procurement process and that a neutral third party did not approve the feasibility study prepared after construction of the project was started.

The Auditor General requested that the inflated cost of the dam, at 14.5 billion Br, was unjustified when the initial estimate was 4.2 billion Br. The construction of the dam was delayed for a year after its commencement due to design problems. An Italian firm then redesigned it, and the construction resumed with a local contractor, Sur Construction, in January 2014.

The audit finding also stated that the Megech Dam Project, located in the Amhara Regional State and expected to hold 1.8 billion cubic meters of water, had no feasibility study nor any study that was evaluated by a third party, which caused delays.

The contractor and consultants of the project are Ethiopian Construction Works Corporation’s Water Infrastructure Construction Division and Ethiopian Construction Design & Construction’s Water & Energy Design Supervision Works Division, respectively.

The Auditor General asked for justification for the bloated project cost, which skyrocketed from 2.5 billion Br to 5.6 billion Br, adding that performance reports delivered by the contractor and consultant varied and payments were effected without the approval of the consultant based on the performance of the tasks. It also questioned the Ministry’s reluctance on assigning the experts to follow up and supervise the project performance.

The Auditor General also asked the ministry why the project was not integrated with the construction of water pipes as the project was designed to provide potable water to residents in Gonder and the preparation of land for sugarcane plantations.

The state minister and the project coordinators responded to the questions, stating that the Sugar Corporation began the Zarema Mayday project and that they were involved only since 2016 when the project reached 40pc completion. The Corporation did not properly hand over all necessary documents, they claimed.

And the assignment of Sur Construction was done at the request of the Tigray Water Construction Enterprise with the aim of raising the capacity of local construction companies, according to the state minister.

The Zarima dam still needs more financing, with 3.7 billion Br having been allocated just this fiscal year. After the project was transferred to the Ministry, a project management team of 16 experts was formed to oversee procurement and contract administration.

“The reluctance to take immediate actions for such urgent projects was due to gaps at the Ministry,” Abraham said. “The Ministry has devised an exit strategy for both projects that will expedite the completion of the projects.”

The Auditor General, unsatisfied with the remarks of the state minister, criticised the Ministry for not coming up with a time frame for taking corrective actions and stated that they would be waiting for more elaborate justifications for the project lag. Mohammed Yesuf, the chairperson of the standing committee, backed the assertions of the Auditor General and adjourned the meeting.



By BERHANE HAILEMARIAM
FORTUNE STAFF WRITER

Published on Jan 12,2019 [ Vol 19 ,No 976]


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