Insufficient funds and non-existing concepts caused a delay of the modernization of railways
Press Release – March 25, 2013
The Supreme Audit Office (SAO) aimed at constructions of railway junctions within the period 2009–2012. The auditing operation focused on several selected projects and was performed at Ministry of Transport, the State Fund for Transport Infrastructure, and the Railway Infrastructure Administration.
In its previous reports, the SAO warned that the Ministry lacked a conceptual approach towards the funding of (re-)construction and maintenance of the railway infrastructure. As for the projects’ funding, the Ministry of Transport and the State Fund for Transport Infrastructure (SFTI) have not clearly stated their priorities or order of the investments. The SAO also warned that the Ministry and the SFTI failed to establish a distinct division of decision-making competences. The modernization of the rail network has become difficult due to its complicated funding procedures – funds were always allotted for just one calendric year without securing the required funds for the following years. But these projects usually take more years to implement, sometimes even decades.
During the preparation phases of the modernization projects, financial conditions and terms were significantly altered. For example, with five of the audited projects, which had been implemented before the end of the audit, there were cost increases by as much as 8–19 % in comparison with initial agreements.
The Ministry of Transport additionally approved a railway car wash construction at Brno railway depot, which had not been included into the original modernization project. Auditors unsuccessfully asked for a documentation, which would prove that such additional investment was effective and reasonable. The railway car wash was built by the Railway Infrastructure Administration for CZK 305.7 million and in 2011 the wash was let out to a private company for CZK 4 million a year. We may estimate that the costs will return in 75 years – provided the inflation and out-wear are not taken into the account.
Auditors also revealed insufficiencies in public contracts related to the audited projects. The Railway Infrastructure Administration awarded public contracts for additional construction works in the negotiated procedure without publication, but failed to satisfy the conditions as defined by the Public Contracts Act. With one award procedure, the time limit for the submission of tenders in respect of an above-the-threshold public contract was shortened from 52 to 27 days without justification.
For further details about the auditing operation No. 12/11 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-11.pdf (pdf 227 kB).
Communication Department
Supreme Audit Office