Audit: MVR 59.22M unrecovered from advance payment for Kulhudhuffushi housing project

An audit report by the Auditor General's Office has flagged the government’s failure to recover MVR 59.22 million of the MVR 65.99 million disbursed as advance payment for a 400-unit housing project in HDh. Kulhudhuffushi.

The outstanding amount accounts for 90 percent of the total advance payment issued for the project.

The compliance audit report of the Housing Ministry, covering the period from 2018 to the end of 2023, noted that the contract for the Kulhudhuffushi housing project had to be terminated due to the contractor's poor performance and failure to extend the performance guarantee.

At the time the contract was terminated, only 18.74 percent of the total project work had been completed.

On August 26 this year, the remaining work on the stalled project was handed over to the Housing Development Corporation (HDC) for completion. However, the audit report stated that failure to pursue the recovery of funds owed to the state constitutes a violation of the public finance regulation. 

The Audit Office instructed that the necessary steps be taken to recover the funds in accordance with the State Financial Regulations and called for an investigation to take action against those found negligent in the matter.

Furthermore, the audit report recommended referring cases involving non-performing companies to the Procurement Appeals Board and emphasised the need to ensure the financial and technical capabilities of companies before awarding future projects.

The audit also revealed that the state had incurred significant additional costs following the cancellation of several ministry projects that were not progressing adequately and their subsequent retendering to other parties.

Specifically, the audit highlighted seven projects that, after being re-awarded to other contractors, required an additional MVR 112.33 million in expenditure from the state budget.