The state-owned National Works Agency (NWA) has rejected the findings of the latest auditor general’s report, insisting that there was no cost overrun on five road rehabilitation projects but instead “additional amounts” that represent “valued and measurable works”.
The NWA said while it acknowledged that there are valuable lessons to be learnt from the Auditor General Department’s (AuGD) review of six projects under the Major Infrastructure Development Programme (MIDP), it disagreed with “certain implied assumptions prevalent in the report”.
The report from the AuGD stated that the NWA incurred cost overruns totalling US$63.4 million (J$9.8 billion) for rehabilitation work on five of six main roads under the MIDP.
The performance audit was conducted to determine whether the NWA managed the implementation of capital projects effectively, efficiently, and economically to maintain the country’s main road network and achieve value for money.
In a five-page response sent to The Gleaner, the NWA said the AuGD’s argument that projects should “only proceed with perfect or near-perfect information and that the Government should be restricted in its discretion to amend project scopes during implementation” is “deeply flawed”.
The NWA said the argument “betrays” the full understanding of the management of infrastructure projects in a brownfield environment and the practical realities on the ground.
The NWA said the National Water Commission (NWC) had challenges financing and executing the upgrade of its infrastructure as was most practical and beneficial to Jamaicans.
It said Cabinet supported the entity as part of the Government’s strategic decision to provide integrated infrastructure.
The NWA said it was in this context that new elements – water and sewer - were incorporated as ancillary items through a separate agreement and done under the MIDP.
“These infrastructures will last for decades and provide critical reliable services to support development trends within Kingston and St Andrew. We will also avoid the unwarranted digging up of the road by the NWC after the new road has been constructed,” the NWA said.
“We find it very interesting that the auditors sought to zoom in on what they determined to be cost overruns but sought to demagnify or remain almost mute on the fact that through a deliberate and calculated plan, there was a reduction of US$69 million.”
It said this happened through an NWA-led negotiating team that also included the Ministry of Finance and representatives from the Ministry of Economic Growth and Job Creation (MEGJC) that negotiated for the same with the China Harbour Engineering Company.
The agency said the MIDP was originally a road-only programme with a contract signed for $353 million. The programme scope was varied by 5.3 per cent and completed at US$371 million.
The NWA said the Government took a strategic decision to support the inclusion of ancillary works after the NWC declared its inability to finance the necessary potable waterline and sewer line upgrade.
It said this was done through a follow-on/add-on contract in the amount of US$46 million and that the works were expanded by 66 per cent and completed at US$78 million.
“Together, this variation represents US$50 million or J$6.4 billion on the original programmes – roads and ancillary works,” the NWA said, noting that the average exchange rate over the life of the programmes was US$1 to J$128.
“These additional amounts were not cost overruns. They represent valued and measurable works completed as was agreed,” it added.
