07 April 2010

AMP De Facto Government must take responsibility US$8 million irrigation scheme waste




Dili, 5 April 2010

Today in this parliament, FRETILIN wants to raise the issue involving the budget expenditure for Construction of the Bebui Irrigation Scheme, which commenced in the 2008 Fiscal Year with an amount of US$1.1 million, US$4.805 million for the 2009 Fiscal Year and a further budget allocation of US$2.664 million for the 2010 Fiscal Year, totalling US$8.569 million.

As we all know the construction of the Bebui Irrigation scheme is running beyond the contract time, originally meant to take one year, it has already been undergoing construction for three years for the above-mentioned budget. The de facto government itself has said that the people of Uatolari will continue to receive subsidised rice to the value of US$30 per month from the time the construction commenced. However, the people of Uatolari are saying as we have all heard on TV Timor-Leste, that they want to buy subsidised rice but it is not available for them to buy.

Members of Committee G of this parliament effected a field visit to the construction site and has seen the result of the delay in the construction, the poor quality of the Project which is not to construction standards, and even worse the irrigation channels have been built as if they were building a wall for a house (please refer to the photos).

The company that was contracted is “United General Constructions.” This company, UGC commenced the construction by itself, but after 6 (six) months UGC engaged a sub-contractor, named “Rocky Constructions”. It is clear from all that we have seen from the carriage of this contract by UGC that this company does not have the capacity and conditions to undertake the construction of this Irrigation Scheme.

The State, through the Government must already know that this company had problems with the Gleno Prison rehabilitation project in Ermera, because it has been established by investigation that the budget allocated in this prison rehabilitation project did not conform with the technical calculations or the Bill of Quantities, or that the budget allocated was in excess of the required works.

Why has the Government, especially the relevant ministries or departments continued to grant construction contracts to this company?

Mr. President, fellow Deputies (MPs).

When we look at the whole of the Bebui Irrigation Scheme Construction this contract process, we see strong indications of “Conspiracy, Nepotism and Payoffs” having been involved. Why else would such a large project involving a budget of US$8.569 million did not undergo a tender process but was instead single sourced, or in other words, selecting friends?

The other grave concern we have is that in the Sub-Contract Agreement Ref. No. RCPL-UGC/ITB 810827/SUBCON 09-001 between IGC and Rocky Constructions PTY LTS.

Article 6 of the Agreement regarding the Contract Costs states amongst other things:

6.2 The agreed Sub-Contract price is in US Dollars and are: US$3,900,000.00

6.5 The Sub-Contract costs include all obligations (obligation to import construction material), to pay 2% duties, and other duties and taxes payable by the Sub-Contractor. If the Principal Contractor is for some reason liable for payment of any duties that should be payable by the Sub-Contractor, such payments that may be made by the Principal Contractor shall be deducted from the total moneys payable to the Sub-contractor for construction progress payments.

Mr. President and fellow deputies.

Our view is that UGC could not have legally entered into the Sub-contract, but what is worse is that certain members of government knew of the Sub-Contract having been entered into, worse because although the original contract amount was for US$8.569 million, the Sub-Contract was made for the mere amount of US$3.9 million.

FRETILIN considers this to be criminal behaviour, and that the company involved, UGC, needs to be investigated urgently, as well as the relevant Ministries, because the state has been deceived and there has games played with the peoples’ money.

Friends, the Sub-Contract entered into by UGC breaches the Procurement Law, and worse, the Sub-contracting at less than 50% of the original contract price ($8.569 million) as far as we are concerned is criminal conduct that has to be thoroughly investigated.

The technical design as far as we are concerned can only be considered to be draft designs, because they were not at any stage approved by certified engineers, and worse, they did not comply with construction engineering standards.

We also understand that there are always Consultant’s and Management Fees in such construction contracts. However, the Bebui Irrigation Construction is relatively straightforward construction, because it involves the constructing a simple dam and intake. Even this was not designed or constructed utilizing standards, with the canals being constructed as if they were a wall for a house, and some to this day have been left abandoned (see photos).

The budget allocated was not according to the Bill of Quantities, because no in depth technical survey was done and the moneys were allocated by guesswork.

Let’s compare this with look the previous construction of the Laclo Irrigation Construction in Manatuto, which cost US$6,701,122 million. The Consultant’s, Management and other associated fees totalled US$2,400,870. The construction of the Laclo Manatuto irrigation scheme was completed with high quality and to a high standard and the canals were dug in to the ground.

We have to make this comparison because this is the Peoples’ money we are talking about here. There can be no justification based on how long ago it was because after all building material costs have fallen because of the AMP government’s own reform of the Tax Laws.

There are many other examples of such incompetence by this Government including the Baucau Reference Hospital, which has been due for completion for more two and a half years but which is now abandoned. We have heard all sorts of statements about it in the press but to date there has been no progress whatsoever and it has just been left idle. This is a demonstration of this government’s irresponsibility.

Many Referendum Package projects have resulted in works of inferior quality, like the construction of the Wereca-Lacluta River Irrigation Scheme. The protection banks were brought down by water from the first rains. It is nothing more than throwing out good money. The construction was not according to standards there either. Constructions are simple done according to personal whims. The AMP government has to take responsibility, because it is a result of their lack of planning on projects that are implemented recklessly (see photos)

For these reasons FRETILIN demands from the Government that the following documents be delivered to this parliament:

· The Bebui Irrigation Scheme Contract with United General Constructions.
· The Sub-contract Document with the Sub-contractor Rocky Constructions.
· All other documents relevant to this contract.

With this FRETILIN demands this parliament to urgently establish a Parliamentary Inquiry to get to the bottom of this issue.

I thank you all for your attention.

Inacio Freitas Moreira
Deputado (MP) FRETILIN

Note: Photos were tabled with the statement that are available from FRETILIN. Media at fretilin.media@gmail.com

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