Audit of utilization of project machinery and equipment in Egypt

Report covers the period 1975-1986 and is based on a review of eight projects. The audit showed that large amounts of USAID/E-financed machinery and equipment either were not being used or were being used at levels much below what was anticipated. In only one of the eight projects examined was implementation proceeding according to schedule and the equipment being used effectively; this project involved the supply and installation of 12 turbines valued at $44.5 million at the Aswan High Dam. While the root causes of these problems were difficult to isolate, the major factors were the inability of the Government of Egypt (GOE), USAID/E, and contractor officials to coordinate procurement with construction progress, and the limited capability of GOE entities to operate and maintain machinery and equipment. Two industrial subprojects procured about $15 million of machinery and equipment which remained in crates for periods ranging from 6 months to 2 years. A project to provide a computer network for controlling electric power distribution was completed 5 years after the scheduled completion date. In a decentralization project which distributed equipment to 21 governorates, numerous instances were found of items that were not needed, not used, or underused. A salt production plant was completed 3 years behind schedule; packing and bottling equipment valued at over $400,000 in this plant never operated for technical reasons. Two other projects, each incorporating significant amounts of machinery and equipment - one involving an $11.9 million water transmission line, the other a $7.1 million sewage pumping station - were completed, but were not operating at the completion of the audit. Recommendations are that USAID/E: (1) link the procurement of machinery and equipment directly to actual construction progress; (2) establish a group to ensure GOE reporting on equipment utilization and to develop long- and short-term solutions to utilization problems; (3) make a demonstrated GOE ability to operate and maintain machinery and equipment a prerequisite to procurement; and (4) develop plans to put certain assets to effective use to achieve project purposes. The Mission agreed with these recommendations and suggested several ways to implement them. (Author abstract, modified)