The CAG said in the Performance Audit Report on Management of Bulk Procurement of Government Vehicles and Distribution of Fuel as implemented by GPSA that the loss was due to weakness in the course of business negotiation processes.
The CAG said GPSA was also weak in conducting bulk procurement of vehicles directly from manufacturers hence occasioning the loss through third party services.
“Despite the fact that GPSA secured a discount of four percent for the procured vehicles, the discount did not apply while it procured vehicles throughout the year. As a result of the termination of the discount, GPSA didn’t save 2.5bn/- out of 468 procured vehicles worth 67.3bn/-,” stated the report.
For the last four years covering 2016/17 to 2019/20, GPSA procured 963 vehicles worth 197bn/- from seven agents and dealers, contrary to the requirements of circular No.3 of 2014 which wanted the agency to procure motor vehicles on behalf of procuring entities directly from manufacturers.
The CAG also noted that despite the fact that GPSA had negotiated prices with vehicles suppliers, vehicles were procured at a price higher than the negotiated price. The reason behind this was that GPSA did not review the framework contract which was valid for only one year starting from December 2017 to December 2018. .
“As a result, procuring entities and GPSA lost the opportunity to save a significant amount of money for a number of vehicles procured between 2017/18 and 2019/20,” the CAG explained while saying that GPSA had limited bargaining power to negotiate prices of vehicles with manufacturers due to the fact that the market for motor vehicle is characterized by lack of competition.
Despite the loss caused, GPSA imposed a service charge of one percent on any motor vehicle’s price that procuring entities ordered contrary to the requirements of Public Procurement Act of 2011.
“As a result, for the last four financial years, GPSA collected a total of 2.47bn/- as motor vehicles’ service charge from procuring entities, contrary to the requirement of Section 105(2) (j) of Public Procurement Act of 2011 that mandates the same task to the Minister of Finance and Planning,” the CAG noted.
In addition, the audit found out that the system for managing and distribution of fuel did not provide best price for procuring entities as expected. Despite the fact that, GPSA does not incur other business costs such as corporate tax and staff salaries unlike oil marketing companies, it sold fuel at the maximum Ewura’s indicative retail prices as OMCs.
The CAG among other things, recommend establishment of a web-based fuel management system which will easily manage and control supply of fuel and deny any loopholes for mismanagement of the product to reach non-intended users.
“Design a monitoring framework that will be employed to monitor the progress made by GPSA in bulk procurement of vehicles that will enable the Ministry to have real time information and intervene for improvement timely,” the CAG concluded.