Overpayments for ECD expansion still to be recovered

…contractors stop repayments, Ministry letters go unheeded

At least two contractors, who were overpaid millions of dollars for works on the East Coast of Demerara (ECD) four-lane expansion before it was taken over by China Railway First Group (CRFG), are yet to repay the monies, despite letters from the former Public Infrastructure Ministry begging them to do so.
According to Auditor General Deodat Sharma’s 2019 report, the two contractors who, were overpaid a combined sum of $253 million, have only made partial payments that have failed to do more than scratch the surface of this substantial debt.
The Auditor General noted that in the case of one contractor, who upgraded the road from La Bonne Intention to Beterverwagting, $100 million is still outstanding. The contractor repaid a mere $20.6 million and reminder letters have gone unheeded.
“The Head of Budget Agency stated that the contractor was written to make restitution of outstanding debt on 11 September 2019 and 29 January 2020. However, no response has been received to date,” the report states.
“The ministry continues to implore the contractor to pay the outstanding sum of G$100M owed for overpayments made on this contract. The last payment received was in December 2017,” the Auditor General said of this contractor.
Meanwhile, the other contractor, who was tasked with upgrading the road from Beterverwagting to Triumph, was overpaid a total sum of $132.6 million. He too repaid $20.6 million, leaving $112 million outstanding.
“The Head of Budget Agency stated that reminder letters were sent to the contractor in February 2019. However, there has not been any additional recoveries. The Head of Budget Agency stated that the contractor was written to make restitution of outstanding debt on 11 September 2019 and 29 January 2020. However, no response has been received to date,” the AG said in his report.
Similar to the previous company, the AG noted that the last payment received was in December 2017. The Auditor General urged the Ministry to continue to follow up both sets of money owed by these two contractors.
When the East Coast Demerara road project started in 2011, it spanned Better Hope to Belfield, with the civil works split into seven lots. More than $2 billion was expended on the project.
But for various reasons, the project came to a standstill for years as contractors defaulted on their agreements. The project has since been completed by CRFG, with the help of a US$45.5 million concessional loan from the Export-Import (EXIM) Bank of China.
The unretrieved overpayments from the ECD expansion are just some of the cases of overpayments on which the Audit Office has been providing advice over the years. For his 2019 report, however, the AG found that the trend of overpayments continued unabated.
This time, the Government was flagged for overpaying some $166 million of taxpayer dollars in contracts. According to the Audit Report, a number of Ministries, departments and regions were guilty of this practice.
For instance, various Ministries and departments overpaid contractors as much as $92.3 million. The Public Infrastructure Ministry, according to the report, accounted for $63.7 million. Meanwhile, $73.7 million was overpaid by regional administrations. Regions Two, Eight, Nine and 10 were responsible for 70 per cent of this sum.
There is some good news, however. Auditor General Sharma noted in his 2019 report that as of September 2019, $20 million was recovered. This, therefore, leaves $146 million outstanding. (G3)