Audit reveals Sri Lanka CEB accounting misdeeds, project delays

ECONOMYNEXT – An audit of a foreign-funded project to improve power supply for remote islands off Sri Lanka’s northern Jaffna peninsula has revealed accounting misdeeds by the Ceylon Electricity Board (CEB), with even an internal auditor not appointed.

Pay as you earn tax of 3.76 million rupees had been paid by the project in the year under review on behalf of CEB staff members, contrary to provisions in the Inland Revenue Act, according to the audit by Auditor General Gamini Wijesinghe.
 
The Asian Development Bank gave a loan of 115 million US dollars or 16.6 billion rupees for the project, estimated to cost 160 million dollars, to enhance the efficiency and reliability of the electricity supply and distribution system.

The project ‘Supporting Electricity Supply Reliability Improvement’ is scheduled to be completed by 2021, but the audit revealed that even by July 2018 no action had been taken to select a contractor.
 
Several accounting deficiencies were revealed by the audit released recently covering the project’s first accounting year from 01 January 2017 to 31 December 2017

Civil construction work had not started in the year under review nor expenses incurred, but assets like cables and insulators bought for 857 million rupees and transferred to the CEB were shown under inventories.

And 112 million rupees spent as project monitoring expenses were shown under civil construction work in progress, Auditor General Gamini Wijesinghe said.
 
“Due to poor performance in execution of the activities of the project, out of the total allocation of 4.4 billion rupees made by the budget estimate for 2017, only 457 million rupees or 10 percent had been used during the year,” he said.

The project was to set up renewable energy systems like wind and solar on isolated islands off the northern Jaffna peninsula like Delft and Nainathivu.
 
But no action plan with financial and physical targets and fixing responsibilities to ensure the project gets done within the scheduled time period had been prepared.

Action had not been taken to award contracts for building hybrid renewable energy systems owing to delays in land clearing and getting approvals from local authorities and department of coast conservation, Wijesinghe said.

A contract was awarded in December 2016 to supply materials like concrete and steel at a cost of 1.9 billion rupees, with an advance paid. But the materials had not been supplied even by December 2017 with no reason given for the delays, he said.

No action had been taken to hire an internal auditor to set up proper monitoring mechanisms on the project activities, as required for donor-funded projects costing over 10 million US dollars, Wijesinghe said.

In another project, the ADB had also loaned 21 million dollars to improve electricity supply in the city of Kandy in the central hills. But it had not been done and most of the money transferred to other projects with no reason given, Wijesighe revealed.
(COLOMBO, April 10, 2019)
 

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