The functionality of the road infrastructure resource management system is not ensured according to a uniform execution and reporting framework. This allows, in some cases, the use of resources contrary to the regulatory requirements, as well as the mismanagement of public funds and assets.
The Court of Accounts of the Republic of Moldova presented, on April 20, within the Public Finance Control Committee (PFCC), the Compliance Audit Report on the use by the administrative-territorial units of the transfers from the state budget intended for road infrastructure and the Compliance Audit Report on the management of public assets by the State Enterprise "State Road Administration" (SRA) in 2020.
The auditors of the CoARM presented to the PFCC’s members the findings, which attest to deficiencies in the use of public money for road infrastructure.
The approved volume of transfers from the state budget for the infrastructure of local public roads, according to the Law on the state budget for 2020, amounted to a total of 1 billion lei, of which: 211.5 million lei or 20.7% went for the public roads within the ATU level II Gagauzia, Chisinau and Balti municipality, 527.6 million lei or 51.6% for the district budgets, 282.8 million lei or 27,7% for the town halls of the district and village centers.
The audit found that central and local public authorities do not have accurate information on the length of the district and local roads, streets, and their quality and condition.
Level I and II LPAs have not approved road network maintenance strategies that would allow for annual or longer-term planning.
In the same context, the public authorities have not ensured a proper use of the budgetary means for construction works, although they are directly responsible, in addition to the obligations assumed by the contractor, for the technologies applied, the quality and the estimated prices. Thus, the audit identified repair works on roads and streets, which were contracted and executed in the absence of an expert project documentation in the established manner. Respectively, 4 district councils and 3 town halls admitted the execution of works on roads and streets in a total amount of 109.7 million lei in the absence of elaborated projects and expertise.
Local authorities, as road administrators, do not keep a record of signs or other special devices located on the roadside. In 2019-2020 alone, 8 District Councils and a City Hall incurred expenses of 812.8 thousand lei, without documenting the damage or theft of indicators and the installation of indicators on new portions of roads.
Also, the audit attested that at the level of local authorities there is a lack of control procedures and evidence of green spaces under the road of district interest managed by the District Councils Causeni, Falesti and Calarasi, being made total expenses of 437.8 thousand lei for deforestation, without full registration of the wood mass obtained and in the absence of the environmental permit.
Regarding the Compliance Audit Report on the management of public assets by the State Enterprise "State Road Administration" (SRA) in 2020, the following were addressed.
The audit team, assessing the compliance of the public patrimony management by the SE “State Road Administration”, in 2020, found:
- the revenue planning and execution system set up by the central authority responsible for the maintenance of SRA's operational activity is based on the proportion of the volume and cost of work performed by entrepreneurs and less on the real needs of financing expenditures, as determined by the principles of budgetary legislation. This mechanism allowed the enterprise, in 2020, to generate an excess of revenues, obtained from the financial resources allocated from the state budget for road maintenance and repair, of about 21.1 million lei;
- the financial means necessary for the administration of national public roads, in the total amount of 16.9 million lei, were planned, approved and allocated based on previous practices, based on fixed amounts, not calculations and justifications, provided by the principles of budgetary planning;
- the revenues for fulfilling the function of beneficiary for the maintenance works of the public roads were calculated and increased not accordingly with about 10.8 million lei, given the irregular inclusion in the calculation base of VAT;
- the use of financial means in the amount of 3.8 million lei, for general and administrative purposes, in the absence of the necessary coordination with the relevant ministry, generated the non-compliant execution of the Program of works for the design of national public roads for 2020.
In terms of expenses, the audit found that the expenses related to the quarterly awards of employees were unfoundedly increased by about 8.1 million lei, given the incorrect application of the calculation basis concerning their establishment.
In 2020, the SRA was involved as a defendant in 13 national disputes and 8 international arbitration proceedings, the value of the claims submitted against the company being about 470.3 million lei. Out of the total claims submitted to the company, the international Courts issued in 2020, final payment decisions in the total amount of 178.6 million lei. At the same time, the SRA confirms the possibility of future risks of losing within the relevant Courts the other disputes in the total amount of claims of 291.7 million lei.
The lack of a multi-annual budgeting system, linked to the medium-term budgetary framework and linked to the real costs of the need to repair and modernize public roads, has led to a shortage of resources to cover payment commitments as a result of procurement procedures, a deficit of resources to cover the payment commitments, independently assumed by the SRA, of the works planned to be executed in the years 2020 - 2021, in a total amount of about 979.8 million lei.
Due to the insufficient actions of the SRA, including the lack of inventory of the managed public roads, three local roads with a total value of 32.0 million lei (32,041.5 thousand lei), were not properly regulated and remained to be registered in the accounting records of the company.
The audit also found that the "Avtomobilist" rest base, located in Ukraine, due to the lack of a development or business strategy, continues to be administered contrary to the spirit of a sound management.
Similarly, in the case of the rest base, the line houses, with a total value of 4.4 million lei, sent under the administration of JSC "Roads", were managed contrary to legal provisions, not ensuring the integrity and efficiency of their use, some of them being occupied and misused, and others being in a damaged state.
Finally, the Court of Accounts concluded that the general objective set by the Parliament and taken over by the Government "80% of national roads in a good and very good condition, by the end of 2020, there are no bad and very bad roads", was compromised, due to the lack of performance of the Action Plans regarding the implementation of the policy documents, and the ratio of the quality of the roads in a bad and very bad condition increased from 27.2% to 47.3%, due to the decrease of those which were in a good and mediocre condition.