The construction project of Batticaloa Postal Complex has come under scrutiny following the recent revelations by the Auditor General’s (AG) Department regarding irregularities, misappropriation, and mismanagement of public money.

As per the recent audit report of the financial statements of the Department of Posts for the year ended 31 December 2022, comprising the statement of financial position as of 31 December 2022, the statement of financial performance, and cash flow statement for the year by the National Audit Office (NAO) of the Auditor General’s Department, a sum of Rs. 100 million had been allocated as financial provisions for the Batticaloa Postal Complex construction project.

Budgeting blunders

Despite the Department of Posts declaring the physical progress at 90% and financial progress at a seemingly-impressive 99.31% as of 31 December 2022, a stark revelation unfolds. 

Shockingly, nine crucial tasks integral to the project remain incomplete, casting doubt on the accuracy and transparency of the reported progress. The discrepancy between reported figures and the actual status of the project raises serious questions about the effectiveness of project management and oversight mechanisms.

Furthermore, it has come to light that a staggering Rs. 343,739,916, inclusive of Value Added Tax (VAT), had been earmarked for the construction of the Batticaloa Postal Complex. The construction agreement, inked on 8 May 2019, had enlisted the services of the Central Engineering Consultancy Bureau (CECB). However, a closer examination of the construction project has unearthed critical matters that demand immediate attention and scrutiny.

The department had failed to allocate provisions for the consultancy service fees related to this construction project. The consultation fee amounting to Rs. 8,079,172 had been disbursed by 31 December 2022, drawing from the provisions designated for the construction itself. 

This oversight underscores a lapse in financial management and raises concerns about the budgeting process for critical components of the project.

Timeline turmoil

Further revelations expose a stark deviation from the original timeline outlined in the contract agreement. Initially slated for completion on 12 March 2021 as per Section 8.2 of the agreement, the project experienced not one, but three extensions. Despite the contractual obligation to conclude by 19 December 2022, as of 15 February 2023, the project remained incomplete, and an extension to the contract period is yet to be formalised.

Compounding the issue, the CECB had sought Cabinet approval on 13 January 2023 to secure an additional estimate of Rs. 216,577,994 for the completion of the project. Shockingly, as of 15 February 2023, the necessary approval from the Cabinet of Ministers remained elusive. 

This delay prompts serious questions about project management, adherence to contractual obligations, and the effectiveness of bureaucratic processes in ensuring timely and cost-effective project delivery.

In response to the audit concerns, the Accounting Officer of the Department of Posts has attributed the construction project delays to a confluence of challenging factors. The acknowledged hurdles include significant delays in procurement processes, a scarcity of construction materials such as cement, and the adverse impact of the Covid-19 pandemic on the country’s economic landscape. 

The Accounting Officer cites an alarming rise in foreign exchange rates amid the pandemic and the overarching economic crisis as additional impediments to the timely completion of the Batticaloa Postal Complex.

A notable revelation from the officer’s response is the admission that the consultation fee linked to the construction was not pre-allocated, hinting at a fundamental oversight in financial planning. This admission raises serious questions about the foresight and strategic financial management within the Department of Posts.

Regarding the delay in completing the construction, the Accounting Officer has elaborated on the myriad challenges faced. These include an inability to sustain construction activities, the imposition of Police curfews during the Covid-19 crisis, disruptions in the supply chain due to delayed purchases, and the heightened costs of construction materials. 

The cumulative effect of these challenges, compounded by the economic crisis, has purportedly rendered it unfeasible to adhere to the original timeline and estimated cost.

In the pursuit of a resolution, the Accounting Officer has revealed that a memorandum was submitted to the Cabinet of Ministers to obtain approval for an additional estimate. However, as of the latest update, the draft memorandum dated 12 January 2023 is yet to secure the crucial approval from the Cabinet. 

This bureaucratic roadblock adds another layer of complexity to an already contentious situation, leaving stakeholders and the public awaiting clarity on the fate of the Batticaloa Postal Complex construction project.

Land lapses

In addition, the audit report has further exposed a web of inefficiencies within the Department of Posts, shedding light on serious oversights in the management of post offices and the utilisation of acquired land.

A staggering 565 post offices were found not to have been formally taken over, and despite the possession of land, eight post offices continued to operate out of rented buildings, with no initiative taken to construct permanent structures.

According to the Accounting Officer, requests for land transfers have been dispatched to the relevant institutions to expedite the process. However, despite land acquisitions, no financial provisions have been allocated by the Treasury for constructing new buildings on the acquired lands, resulting in the underutilisation of valuable resources. 

The auditors noted 83,152.61 square metres of underutilised land in 43 post offices and two quarters owned by the department as of 31 December 2022.

In response to the financial crisis, the department has submitted a memorandum to the Cabinet of Ministers proposing the construction of new buildings on 17 underutilised plots of land. While Cabinet approval has been secured, auditors point out the potential for income-generating projects on these lands, beyond the scope of post office facilities. 

Unassessed plots

The audit has also revealed administrative lapses in land assessments, with 63 plots of land acquired by the department not assessed as of 31 December 2022. Shockingly, 30 plots of land taken over have remained unassessed for over two years, and 15 plots had been acquired but not assessed for periods ranging from 10 to 35 years. Additionally, 30 plots of land were neither taken over nor assessed for less than two years, with the department unable to determine the acquisition date of three lands.

Despite an expenditure of Rs. 371,940 for land acquisition and surveying during the reviewed year, the department had failed to complete the transfer activities by 28 March 2023. The Accounting Officer attributes delays to the complex process involving Divisional Secretaries, the Land Commissioner General, and varying legal conditions.

The audit also exposed discrepancies in land ownership records between the Head Office and the Deputy Postmaster General’s Office. The Accounting Officer, in response, assures the availability of transfer certificates and related documents in the Buildings and Lands Division, emphasising the relocation of original copies to the Postal Headquarters.

Attempts made by The Sunday Morning to contact Postmaster General S.R.W.M.R.P. Sathkumara proved futile.