Audit-General vindicates Chronicle

- 30 Pick-ups ordered still not supplied after 1? years
- Says immediate objectives of SRP not met after committing $20.976,651; euro22, 926.18 & ?4.581m

In his final report on the Volta River Authority the Auditor- General has noted that 30 pick- ups ordered by the authority had not been delivered more than one year after the order.

The 51-page report dated July 11, 2003, also indicated that the immediate objectives of the Strategic Reserve Plant (SRP) were not met after the authority had committed $20,976,651, Euro 22,926,18 and ?4.581million.


The report said the 30 double-cabin pickup vehicles were ordered at $565,413 from Japan Motors since February last year.


Japan Motors would, however, not say what had become of the order when reporters contacted the company. A spokesman only said it has furnished the Auditor-General’s investigators with all information on the order.


The Chronicle made a futile attempt to reach the A-G to throw more light on the matter, but further enquiries at the VRA revealed that the Director of Procurement and Transport at that time was not aware of the order.

In earlier editions, The Chronicle had carried reports that raised questions about both the purchases of the Pickup vehicles and mounting rentals over the SRP, which observers see as a white elephant.


On the SRP, the report stated that the VRA as at June 30, this year, had so far made financial commitments of $20,976,651; euro 22,926.18 and ?4.581 million.


It stated that, “as management admits, unfortunately, while the technical merits for the acquisition of the SRP are sound and indeed essential for the success of the continuous power supply, the implementation of the project has been beset by a number of serious technical, operational, contractual and financial problems which include availability of fuel that meets the specifications of General Electric (GA), delays in completing key preparation works such as the spreading of crushed rock at the site, installation of remaining 11.5KV power cables and knife switches as well as termination kits for the 11.5KV cables to be supplied by GE and ever-worsening of the authority’s liquidity position.”


The A-G’s report at page 48 states, “the result, we may conclude, is that the immediate objectives of the SRP have not been successfully met. Section 4(3) of the VRA Development Act, 1961 (Act 46) enjoins the President to determine the terms and conditions for the board members of the VRA but this the A-G’s report observed, on the contrary, that successive boards determined their own conditions, of which the current board is not an exception.”

It also noted that since its inauguration in November 2001, the board members have enjoyed the following: monthly transport and sitting allowances, electricity subsidy, except chief executive’s November 2001, annual bonus for year 2002, security allowance for chairman from May 2002, and allowance for review of minutes by board and committee chairmen effective January 2003.


The board secretary informed the investigators that revision of conditions of the board was not discussed and documented at open board meetings and that decisions were discussed and taken behind closed door with respect to their benefit. The chief executive only instructed her to implement revision of allowance payable to the board members.


The investigation observed that payment of ?750,000 and ?500,000 monthly electricity allowance was made to chairmen and members respectively with effect from November 2001 vide the board secretary’s memorandum of October 18, 2001, to the Finance Director.


The subsidy was increased to ?1.3 million and ?900,000 respectively for the chairman and each member from January 2003. The new rates were paid up to April 2003. On May 7, payment of the new rate was suspended until further notice without assigning any reason.

On annual bonus, seven out of eight board members were paid ?58 million for 2002 (?10 million for the chairman and ?8 million for each member).


The authority approved payment of ?1,249,233 per month being the salaries of two watchmen to the board chairman on June 6, 2002, payment of the allowance took effect from May 1, 2002 and the chairman was subsequently paid a total of ?14,990,796 as security allowance from may 2002 to April 2003.


With effect from January 2003, the board approved allowance/month ?1,400,000 (net of tax) to the board chairman and ?1,120,000 (net of tax) to the committee chairman for the review of minutes.


The chief executive explained the rationale for payment of the allowances to chairman of the board and committee chairman that the chairmen are to take custody of minutes of the committees that they chaired and ensure that they are accurately recorded and in order to do this properly and efficiently, management agreed that each chairman would make themselves available for one full day after the sitting to correct and approve the minutes for submission to the board. The allowance was to compensate them for that job for that day.

The A-G stated that, “we found the payment, in principle, unacceptable and questioned the quantum of the amount payable.”


In a related development it is being alleged that since fuel stored in the tanks at the site of the SRP (30,000 m/t) is not the right specification to run the rental units, there is a move to purchase six tanker-loads of aviation fuel to be connected direct to operate the SRP at all cost.


Energy experts at the VRA and outside intimated to The Chronicle that if that happens, electricity bills will have to be increased above 300% in order to meet the operational cost since aviation fuel is considered very expensive.


It is projected to cost more than 15 cents/kwh as against about five s/kwh from Ivory Coast and now that the Western Line has been completed it will only be prudent to transmit power from the Ivory Coast through importation.