Aguan Valley rural electrification project

Audit report covers the period 4/78-9/81 and is based on site visits and document review. Despite initial delays which will require extension of the project, much has been accomplished. Construction of approximately 180 km of transmission lines was completed in 4/81. Substations are scheduled to be completed by 4/82; secondary and distribution lines remain to be constructed. Improvement is needed in several areas. Although the contractor has accepted responsibility for failing to properly paint transmission line towers, no settlement or remedial actions have yet been negotiated. The GOH implementing agency, the Empresa Nacional de Energia Electrica (ENEE), has made no effort to establish the Internal Wiring Fund to provide loans for interior home wiring and promote system acceptance in the target area. Because USAID/H has not notified ENEE of all disbursements, ENEE"s accounts do not accurately reflect A.I.D. disbursements. In addition, ENEE has not maintained an adequate inventory of or control over project materials; many materials have been damaged or used elsewhere in the national electrical system. The project financial plan does not reflect the funding requirements of various project components. Prior to an Implementation Letter issued 10/81, ENEE had not been submitting progress reports to USAID/H. It is recommended that USAID/H: (1) obtain from ENEE an agreement with the contractor providing for repainting of towers; (2) obtain from ENEE a firm plan to establish, finance, and operate the Internal Wiring Fund; (3) establish procedures and controls to ensure that all advices of disbursements are provided in a timely manner and that ENEE"s and USAID/H"s records are reconciled periodically; (4) ensure that ENEE reprogram a balance of $5,680 remaining in the supplies budget; (5) obtain and review ENEE inventory data to ensure that all project materials are accounted for and turned over to the contractor in usable condition; and (6) in consultation with ENEE, update the financial plan to reprogram funds among project components.