Audit of the Regional Development Office/Caribbean infrastructure expansion and maintenance systems project no. 538-0138

Kitts, Grenada, and St. Vincent, and another SP involving all countries in the region. The audit covers the period 9/85-9/90. The project has made significant progress. In St. Kitts, a SP to develop the Southeast Peninsula has constructed a 6.6 mile penetration road (despite considerable delays and cost overruns), installed an electric utility, initiated a land use and environmental management program, and completed all aspects of a fiscal recovery program except tax administration. In Grenada, progress has been made in the areas of site leveling, lighting, building construction, and road repair. In St. Vincent, some accomplishments have been made in rehabilitating access roads and improving roads maintenance. Both the St. Vincent and Grenada SP"s have had problems with monitoring. In St. Vincent, monitoring of the fixed amount reimbursable (FAR) process has been inadequate because of weak controls in the approval of estimates for road rehabilitation, funds advanced for FAR projects have been commingled with other monies, these advances have not been settled in a timely manner, and inspection and acceptance of roads rehabilitated have not been done in accordance with prescribed practices. Inadequate supervision of road maintenance is evident in Grenada, where newly rehabilitated roads have begun to deteriorate after a only short period of time. Several problems exist in the regional SP, which aims to assist 10 national electric utilities in developing a common services organization for training and joint service. (1) The recipients are required to generate revenues to fund loan repayments, maintenance requirements, and other recurrent costs to ensure sustainability. However, the required planning to generate these revenues is either faulty or has never been undertaken. (2) The SP has made substantive modifications in training inputs/outputs and postponed indefinitely two other components. These modifications were made without either evaluation or project paper amendment and approval. (3) No accountant has been hired and other weaknesses exist in internal controls.