E76M SPENT ON CAR RENTALS

MBABANE – The Auditor General’s (AG) report has revealed significant financial mismanagement and irregularities across several government ministries and departments.
The AG revealed that renting vehicles has cost the taxpayer at least over E76 million in 2024. The AG, Timothy Matsebula, reported that the Ministry of Public Works and Transport incurred exorbitant expenditure in respect of vehicle rentals amounting to E76 411 900, instead of buying the vehicles, under the Central Transport Administration (CTA). Matsebula is of the view that the hiring of vehicles is very costly for government and should be minimised or eliminated by the decision to buy the vehicles.

He revealed that this resulted in an unappropriated over-expenditure of E75 305 000 (6 803.23 per cent), since the appropriated budget was E1 500 000 and the released budget was E1 106 900, in the financial year ended March 31, 2024. Previous audits revealed that the ministry incurred exorbitant expenditures in respect of vehicles (cars) rentals amounting to E8 342 237 in 2022 and E76 411 900 in 2023. Matsebula said this is a clear indication that the ministry had an adequate budget to procure new vehicles but chose a wasteful and uneconomic decision to the detriment of taxpayers’ funds.

Decision

“Value for money is one of the key considerations of any decision involving the use of public funds across government, as it is supported by the ‘Five Case’ Model of Decision-making. The Five Case Model is a decision-making tool used by developed governments to make informed strategic, economic, commercial, financial and management decisions,” he said.
The AG stated that in terms of ‘value for money’, the costs of these rentals may not be sustainable and affordable in the foreseeable future due to the declining trend in the government’s revenue streams, and funding may not be available to sustain the rental option.

“I advised the controlling officer that there should be a balance between the ‘rentals option’ and the ‘buying option’, in line with costs, benefits and risks and consider ‘value for money’. Competitive prices should be opted, in the use of public funds, and should ensure that wasteful and fruitless expenditure is avoided at all cost,” he said. Matsebula further advised the controlling officer to provide supporting documentation and an explanation for the vehicle (car) rental expenditure.

The controlling officer stated that to address this concern, the ministry has collaborated with the Ministry of Finance to fast-track the procurement of new vehicles which is envisaged to positively reduce the rental costs. The audit query remains unresolved subject to the submission of reasons for the exorbitant expenditure. Meanwhile, Matsebula also reported that the ministry incurred significant expenditure on petrol, diesel fuel, lubrication and other related oil products amounting to E262 954 246 incurred by CTA responsibility centre, in the financial year ended March 31, 2024 and a significant increase of 13.1 per cent was recorded.

Financial and Accounting Instruction 0202 (ii) states that controlling officers are responsible for ensuring that no amount is spent in excess of the amounts specified by Treasury Warrants.
Financial and Accounting Instruction 0202(iii) stipulates that the ‘controlling officer should ensure that public money is spent only for the purpose for which they are authorised’.  “There is a risk of spending public funds on non-adding value activities and limited value and benefits to the country. I advised the controlling officer to provide justification for the significant spending and quantify the value and benefits attained by the country from such spending, with supporting documents,” said Matsebula.

The AG said the ministry should also implement cost-reduction strategies and justify the value for money on the spending of the public funds. In response, the controlling officer stated that the ministry’s expenditure on this item is in response to the demand from other ministries. The controlling officer expressed that the enhancement of controls on fuel management is underway with a current ongoing exercise to instal an in-house fuel management system. The response did not provide a justification for the significant expenditure on petrol, diesel fuel, lubrication and other related oil products.

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