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China's audit body details irregularities in major pipeline project

(Xinhua)

08:56, March 31, 2012

BEIJING, March 30 (Xinhua) -- China's National Audit Office (NAO) said on Friday it has found several irregularities concerning quality management, investment control and land acquisition in China's second west-east natural gas pipeline project.

Based on an audit conducted during the June-September period last year, the NAO said construction work on the Guangzhou-Shenzhen sub-pipeline has lagged far behind schedule, as land has not been made available in Shenzhen due to delays for demolition contracts.

The NAO said the Shenzhen municipal government has ramped up its efforts to catch up after being notified about the problem.

Irregular bidding on construction and equipment material purchases involved 837 million yuan (133 million U.S. dollars) as of the end of September last year, accounting for 31 percent of the NAO's random inspections, according to the NAO.

The China National Petroleum Corporation (CNPC), the project's contractor, had already made improvements to the bidding mechanism, the NAO said.

The NAO also uncovered improper calculations for construction expenditures, increasing the amount invested by 204 million yuan.

It said the CNPC has used the overclaimed money to write down project costs.

Other unusual practices included illegal subcontracting, irregular staff employment, exorbitant purchase prices and arbitrary charges.

Despite these problems, the NAO said the second west-east natural gas pipeline has begun to demonstrate its significance as a strategic transmission channel.

Made up of one central pipeline and several sub-pipelines and built with a total investment of 142.2 billion yuan, the second west-east pipeline project begins in west China's Xinjiang Uygur autonomous region and reaches Shanghai in the east, as well as Guangzhou and Hong Kong in the south.

The central pipeline went into service last year, while the rest of the project is expected to go into operation in June this year.

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