Electricity works in the province of Corrientes and restoring of schools in Santa Fe, both financed by Mercosur, recorded "poor planning and partial controls" that resulted in delays of up to three and a half years, gaps of physical and financial goals, and even variations in the amounts foreseen.
The data is derived from a report from the National Audit Office (AGN, for its acronym in Spanish). The Watchdog analyzed the application of the so-called Fund for Structural Convergence of Mercosur (FOCEM), which are resources contributed by Argentina, Brazil, Uruguay, and Paraguay, and that at a local level, is run by the Public Investment Directorate of the Ministry of Economy.
According to the Watchdog every year the FOCEM is made of 100 million dollars. 70% of that total comes from Brazil, Argentina puts 27% and the rest comes from Uruguay (2%) and Paraguay (1%).
As the initiative aims to finance projects that boost the competitiveness of the regions - and the economies - in need, the countries that contribute less are the ones that receive the most funds in the distribution of FOCEM. Thus, of the US $ 100 million, Paraguay owns 48%, Uruguay 32%, while Brazil and Argentina earn 10% each.
Concerning the Argentine performance in the FOCEM, the AGN says that, although the amounts designated to the initiative were "correct," it is noted that "the committed semi-annual contributions were made with delays ranging from 1 to 274 days."
The report includes a table (see Download the Report) that details dates and amounts, both general and real, that allow evaluating the performance of the country.
Thus, for example, it can be seen that by May 31, 2006, Argentina had to deliver $ 6,750,000, but the contribution arrived only on March 6th of the following year, 279 days later, and it was not even completed because the money received by the FOCEM amounted to US $ 6,600,000.
Something similar happened in the second semester of 2006 when the country had scheduled a transfer of US $ 6,750,000 for November 30th and, nevertheless, sent 190 thousand dollars less and four months later, on April 18th, 2007.
In 2007 there were three following supplements; to those already mentioned in March and April (which in fact correspond to the previous year), the first semester of that year was added, which was made on June 28 for US $ 10,450,000, with about 300 thousand dollars more and a delay of 28 days.
However, to count on the Argentine contribution of the second semester of 2007 (electoral period of that time), FOCEM would have to wait six months, because the stipulated U $ S 10.1 million arrived only on May 28th, 2008.
According to the AGN, on May 28th something at least surprising happened: as it was, Argentina took advantage of and paid the 13.5 million dollars foreseen for the first semester of 2008. And on top of that, it did not stop there: The next day, on the 29th, the US $ 13.5 million stipulated for the second semester of 2008 were also canceled. Yes, six months in advance.
The figure as mentioned above, 13.5 million dollars, is the amount that the country has since allocated to the FOCEM each semester, at least until the year 2013, the last one analyzed by the Audit.
During this period, what the Watchdog recognized the delays in disbursements, which ranged between the month (first semester of 2009) and 164 days (second semester of 2013, canceled only in May of the following year).
On the other hand, on the resources that intended for Argentina, 10% of the total, the report found that "between 2007 and 2013 the allocation varied between 8.61% and 11.92%, not complying with the percentage determined in the current regulations."
With resources from the FOCEM, specifically US $ 19,057,519, the interconnection between the transforming stations of Iberá and Paso de los Libres, to the north of the province of Corrientes, was projected to improve the service of final users and attract investments.
To measure progress, the Audit took the time between the project being considered as "eligible" by the Commission of Permanent Representatives of Mercosur and the signing of the Financing Agreement with the FOCEM. This procedure took a total of 665 days -between February 19th, 2009, and December 16th of the following years, a period that "represented a delay of 315 days according to the regulations" of the analyzed fund.
Still, the wait became even longer. After questioning officials of the Energy Secretariat of Corrientes and analyzing the documentation, the researchers found that if to those 665 days "we add up the time elapsed for the call for bids (about 330 days), the FOCEM's no objection to bidding process, and the awarding of the works (which was on June 7th, 2012), it is concluded that the total delay amounts to 3 years and almost 6 months."
"This significant delay triggered two consequences of the great impact on the variation of the final amount of the project," states the AGN. And later specifies: "The first one refers to the variation of costs by the mere passage of time; and the second, the request for a technical modification of the project to expand the installed capacity of the work to meet the potential demand ."
The release adds that those reforms "were not properly substantiated before the bidding process," which means that "the project that was finally approved is not complete," the report says. And besides, "the total cost was varied by 117%, partly due to this technical alteration, and partly because an extension of the project was foreseen, once the tendered works were completed."
And if the bidding process is concerned, the AGN detected "internal control weaknesses in the files," such as "lack of signatures of the bidder, sheet, and blank sheet, lack of date in notes, among others."
On the other hand, the foreseen period for interconnection was 18 months. The researchers reasoned that, if the work began in June 2012, it had to end by December of the following year, but "at the date of the audit team's visit to the operation (in May 2014), it was 172 days late, pending finalization tasks and the assembly of the high voltage line, with a recorded progress of 97%."
Likewise, another schedule that was not fulfilled was the financial one, which registered a delay of 66% concerning the term stipulated in the works contracts.
The Audit continued that the FOCEM has checks specified in its regulations that were "partially complied with," and expanded: "There are no technical accounting controls. The semiannual reports are delivered with a certain delay. The external audit did not take into account the review of the results of the internal audit and, finally, the elevation of the external audit report before the Court of Accounts of the Province of Corrientes could not be corroborated."
To complete, a gem: when the auditors visited the Secretariat of Energy of Corrientes they verified that there "did not have the authorization orders for the construction of high voltage lines or the new transformer station, to the respective provincial authorities."
Likewise with the FOCEN, "integral interventions" were planned in 72 schools in the localities of General Obligado, Vera, 9 de Julio, Garay and San Javier, Santa Fe province. The works were grouped into 18 tenders, due to their geographical dispersion.
And, again, since the project was considered eligible, in April 2010, until the signing of the Financing Agreement, 255 days passed, which "represented 64 days of delay compared to the deadlines determined in the FOCEM regulations" said the report.
On the venture, the AGN noted that "it lacks good planning," and points as reasons: "In 2013, the provincial Ministry of Economy requests additional funds, of which 16.7% is due to the increase of square meters to those originally planned. And in July 2014, the same body requests authorization to apply remaining balances produced by the exchange variation derived from the time elapsed between the date of request of those funds and the approval thereof. " Thus, these modifications, plus other technical ones, caused "a total increase of 60% more" than stipulated.
Meanwhile, the control body detected that two-thirds of the bids (12 out of 18) had a physical progress of 100%, while the others had unfinished work. In addition, in regard to the financial schedule "has not been met", as there were 305 days of delay in the accomplishment of the works and, as of December 31st, 2013, the financial progress was already 101%, that is, they had executed more than all the money planned, when in "simultaneous form" a "request for additional resources" had already been made.