Third Geothermal Well Not Value for Money, Says Audit Report

Montserrat Geothermal Well #3 Lower St. Georges (MCWEL Photo)

The Office of the Auditor General presented its report entitled Geothermal Energy Development Project: Governance & Project Management to the Legislative Assembly on December 17th, 2019.

Background

The project began in 2012 with projected completion by December 2016. For many years, the island has been 100% dependent on costly, imported fuels for electricity and for transportation.
Together with solar energy, a key outcome of this project was expected to be Montserrat’s self-sufficiency in local sources of renewable energy by year 2030, in line with Montserrat’s Energy Policy 2016 to 2030.

Key Findings
(1) The project has had a satisfactory framework of governance, including a dedicated multi-stakeholder Steering Committee, with oversight by DFID, which is the sole funder of the project. However, there were some weaknesses in the functioning of committees over time.
(2) The first two geothermal wells were done within budgeted time and cost and were successful. Several local persons gained valuable experience and training during this phase of the project.
(3) The third geothermal well was drilled in 2015, but, years later, cleaning and testing remain undone, and it has not produced any value for money.
(4) DFID’s negotiations with the contractor have stalled since 2016. In 2018, the firm removed its equipment from Montserrat, and it is unclear if and when the project will ever resume.
(5) The cumulative investment in the project has approximated GBP 18 million (over E.C.$60 million).

Key Recommendations
(1) There is a need to improve the management of contracts, negotiations, and life-cycle relationships with contractors to ensure successful completion of projects and the delivery of expected benefits.
(2) There is a need for more flexible budgeting, especially with long-term projects, where costs can vary significantly over time. Provide more room for contingencies, inflation, and uncertainties.
(3) Periodically review the composition and terms of reference of committees. Regularly assess the performance of committees and of their members (e.g., attendance, frequency of meetings, quality of decisions, percentage of decisions/actions implemented, and timeliness of reporting).
The full audit report highlights several other findings and recommendations. Their implementation will bring significant improvements in governance of projects, accountability of stakeholders, quality of project management, level of service to, and communication with, the public, and progress to local energy utilization.

Download the complete report here –> PERFORMANCE AUDIT REPORT GEOTHERMAL PROJECT – SEPTEMBER 2019

The report in its entirety can be found at the Montserrat Public Library or by visiting https://oag.gov.ms or by requesting an electronic copy from the Office of the Auditor General

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