Audit of environmental activities under USAID/Egypt"s industrial production project no. 263-0101

The audit covers the period 8/78-2/90. SP activities have been seriously delayed and in some cases aborted due to a protracted contractor selection process, inefficient and inadequate performance, and inadequate provisions for TA and training. In 1984, the initial phase of pollution assessment and feasibility studies was completed and 16 activities were initiated with 6 public sector companies. Although these activities should have been completed in 10/87, only 2 had been completed by 3/90. Of the rest, 9 are still active, while the others were eliminated. Consequently, more than 11 years of effort and the expenditure of $14.7 milliion and LE7.9 million have resulted in little if any reduction in public sector industrial pollution. Despite these serious implementation problems, USAID/E has extended the SP 5 times and even planned the initiation of 2 additional complex pollution control tasks. In addition, the Mission has never requested an accounting for Government of Egypt (GOE) contributions. As a result, there is no assurance that the $9.2 million promised has been contributed as agreed. The Mission disputes the statement that the SP has had little or no impact, claiming that activities with selected industrial plants have resulted in the control of hundreds of thousands of tons of various pollutants annually and increased awareness of the importance of pollution control within public sector industry overall. The Mission also maintains that the timeframe for the SP was highly unreasonable. Nonetheless, the Mission took several corrective actions as a result of the audit, including: (1) transfer of the entire project to its Engineering Division, where it can receive increased technical oversight; (2) elimination of the two new proposed pollution control efforts; and (3) establishment of a reporting system for GOE contributions.