CWA’s Crisis Over Contract Mismanagement

The Central Water Authority (CWA) has been rocked by a major scandal, with revelations of widespread irregularities in the awarding of contracts. The crisis has resulted in a massive payout of nearly half a billion rupees to compensate for the difficulties faced by a private contractor.

The crisis began when the former Chief Internal Auditor of the CWA raised concerns about non-compliance with good governance standards and tender rules.

The latest report from the Audit Bureau for the 2020-2021 financial year has shed light on the gravity of the situation.

According to the report, massive irregularities were found in the execution of contracts with a private contractor.

Out of nine contracts worth approximately Rs 762.1 million, eight were terminated during the 2020-2021 financial year.

The contractor failed to meet its contractual obligations and commitments made in a mediation agreement.

As a result, the CWA has been forced to release additional funds amounting to Rs 438 million to complete unfinished works on seven of the eight terminated contracts.

The financial consequences of these irregularities are catastrophic for the CWA.

Materials valued at Rs 26.6 million provided for three contracts were not installed and not returned to the authority upon contract termination, resulting in additional losses.

Furthermore, the CWA was forced to face the confiscation of bank guarantees worth Rs 12 million provided to other public entities for road maintenance, with Rs 2.5 million directly linked to the contractor’s substandard work.

Banking System Failure

The report also highlighted a failure in the banking system. The bank guarantees submitted by the contractor for an advance payment and performance worth Rs 112.6 million were initially not considered by the issuing commercial bank.

It was only on October 5, 2022, that the CWA reported the incident to the relevant regulatory authority.

A sum of Rs 63.2 million was received from the bank on December 29, 2022, but as of now, Rs 49.4 million remains outstanding.

These revelations cast a shadow over the CWA’s contract management and raise serious questions about control and transparency mechanisms within the organization.

The lack of rigor in contract supervision leads to recurring instances of public funds being wasted and significant budget overruns for specific projects.

It is worth noting that the shortcomings highlighted by the former Chief Internal Auditor had previously been raised in a Private Notice Question (PNQ) by the leader of the opposition, Arvin Boolell.

The minister responsible for CWA, Joe Lesjongard, had then announced an investigation to shed light on these areas of concern.

Source: Defi Media