CAG uncovers weaknesses in project management

THE Controller and Auditor General (CAG) has identified weaknesses in man- agement of various projects that were implemented by Tanzania Telecommunications Corporation (TTCL) and Tanzania Electric Supply Company Limited (Tanesco).

In an audit report from the financial year 2021/22 CAG Charles Kichere said there were 464 projects worth 10.33bn/- that were completed by TTCL without being closed due to delayed submission of necessary documents by project manager and inadequate monitoring.

He said, failure to close the completed projects poses a risk of misappropriation of funds due to the possibility of expenditure on the non-existing projects.

CAG Kichere said further that Tanesco had a total of 167 projects worth 39.7bn/- without any sign of progress during the year under review.

“No reasons have been provided for lack of movement in terms of costs or not be- ing closed, indicating a lack of monitoring and risk of misstatement in financial statements in case those projects were completed and are in use without being closed and depreciated,” he said.

Due to that the CAG recommended that TTCL and Tanesco implement proper mechanisms for monitoring and timely closure of projects to mitigate the risks.

In another development, CAG’s audit noted the issuance of 61.99bn/- being advance payment to suppliers without terms and conditions at the Medical Stores Department (MSD) and Muhimbili National Hospital (MNH)-Mloganzila.

“During my inspection at MSD, I found that 22 suppliers received advance payments amounting to 61.81bn/- in the financial year 2021/22 without binding contracts that stipulate the terms of the advance pay- ment.

This, according to him, is in violation of Regulation 164 of MSD’s Financial Regulations, 2011.

“Additionally, I found that Muhimbili National Hospital- Mloganzila made advance payments to suppliers between July 2021 and June 2022, amounting to 178.21m/- without bind- ing contracts.

He explained that the defi- ciency might potentially lead to MSD and MNH-Mloganzila providing soft loans to suppliers who may not have the capacity to supply the products, resulting in a loss of benefits from the funds that have been locked as advances to suppliers.

“I recommend that MSD and MNH-Mloganzila strength- en controls and ensure that no advance payment is made to suppliers without having a binding contract that stipulates the terms of the advance pay- ments,” he urged.

Meanwhile, a special audit held on the construction of a three-star hotel under Tanzania National Park Authority (Tana- pa) at the Rubambangwe-Chato unveiled the contractor commenced implementation of the construction of the project before completion of the procure- ment process.

According to Mr Kichere, on 5 July 2019, Tanapa signed a Memorandum of Understanding (MoU) with Suma JKT Company for the construction of the project in the Rubambagwe-Chato area, so that the contractor could be handed over the project site before the con- tract was signed.

He said the MoU speci- fied estimated project costs of 1bn/- since the actual specified estimated project costs were not established at the time.

“Prior to the project commencement on 28 October 2019, TANAPA made an advance payment of 500m/- to SUMA JKT on 2 August 2019, and later on 17 February 2020 made another payment of 500 m/-making a sum of 1bn/-,” said CAG Kichere.

He went on to explain that, Tanapa commenced procure- ment for the contractor pro- cesses on 11 July 2019 through Procurement Form No. 2, but the tender board changed the procurement method from national competitive bidding to a non-competitive single-source method.

The evaluation of the con- tractor showed that Suma JKT had less than five years of ex- perience and lacked an average annual construction turnover of 1bn/- as required by the In- structions to Bidders (ITB).

“Despite these shortcom- ings, on 26 March 2020, the Tanapa Board of Trustees entered into contract number PA/037/2019-20/W/HQ/139 worth 11bn/- with Suma JKT for the implementation of the project for twelve months starting from 14 April 2020,” he explained.

Adding; “The project implementation report showed that as of 31 October 2021, Tanapa had paid a total of 4.1bn/- being 37 per cent of the total cost with the implementation of 40 per cent, unprogressively remained the same to the time of this special audit on 20 December 2021.

Mr Kichere recommended the need for Tanapa to adhere to the laws, regulations and public procurement procedures during the implementation of future projects.

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