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13 May 2022

Kosovo Energy Corporation has failed to use public funds in the most economical and efficient way

Foto 1 KEK

The National Audit Office (NAO) has published the performance audit report on “Procurement in the Kosovo Energy Corporation (KEK)”. This audit covers the 2018-2020 and aimed to assess whether KEK has managed to achieve the set procurement objectives (effectiveness) over these years or not and if yes, has it achieved them by using the sources in the best possible way (effectiveness).

The audit results indicate that KEK has not managed to make economic and efficient use of public funds, there was lack of transparency, and there was limitation of competitiveness. All this has led to failure to achieve some of the objectives set through public procurement.

Procurement activities were mainly carried out by using the price negotiation procedure and did not provide transparency in procurement.

Negotiated contracts have resulted in higher prices than the contracts previously or subsequently concluded through the open tender procedure. This, in addition to making the Kosovo Energy Corporation conduct procurement activities inefficiently, has made it perform uneconomically in these contracts. The total extra expenditure incurred from the negotiated procurements was close to €739 thousand: €472 thousand for one tender (transport services) and close to €267 thousand for the other tender (security of facilities).

The requesting units and the Procurement Office did neither assess KEK’s needs for promotion in the media properly, nor conduct a market analysis which resulted in unclear and unmeasurable procurement objectives. Consequently, contracts the effect of which was unknown in terms of achieving the objectives were concluded year after year. Out of a total of €377,140 spent on media promotion during 2018-2020, KEK only managed to have €59,113 euros returned through the vocational training centre. Thus, only 15% of the amount spent has been translated into revenues, while the effect of the other objective has not been measured.

The Kosovo Energy Corporation did not provide for the optimal combination of available resources to meet the set objectives. Failure to aggregate the needs to purchase bearings has resulted in a large number of procurement activities. A total of 34 procurement activities were conducted during 2018-2020 for these purchases only.

Procurement project/contract managers did not actively manage the contracts they were charged with. Contract managers’ lack of initiative has led the Kosovo Energy Corporation to the failure to provide the optimal combination of available resources in meeting the set objectives. The reasons behind this situation were: failure to actively monitor the contracts implementation, failure to timely updated agreed dates, failure to apply penalties for delays. The requesting units have faced difficulties due to delays in the contracts implementation.

Lack of cost-benefits analysis on the procurement activities/ concluded contracts have resulting in KEK continuing to conduct procurement activities that did not contribute to the achievement of objectives.

In this regard, the Auditor General, Vlora Spanca, has expressed her concerns regarding the lack of transparency and limitation of competitiveness in some procurement activities and the shortcomings in the management of KEK contracts, which in some cases have led to extra costs. Therefore, immediate actions are required to be taken by the responsible units within KEK to address the recommendations given.

For the purpose of improving the procurement processes, eight recommendations have been given to the Board of Directors and the Management of KEK.

You may read to full report on here.