Part I: Summary

1.1 Audit findings and opinion

1.1.1 Preparation of the expansion project

In 2005, the Government of Macau Special Administrative Region (Government of Macau) initiated the construction of a new passenger maritime terminal on Taipa Island (hereinafter referred to as Pac On Terminal). In the beginning of 2006, the Government of Macau decided to raise the terminal from the level of “auxiliary terminal” to “main border gateway” and appointed the Office for Development of Infra-structures (GDI, according to the Office’s Portuguese name initials) to lead the project. As soon as it took over the management of the project, GDI started the expansion design process, which was concluded in April 2009. The expansion project included the widening of the construction area from 107.2 thousand square meters to 362.9 thousand square meters; the increase from 8 to 16 berths for 400-person boats; the addition of 3 berths for 1200-person ferries; and, also, the addition of one helipad on the terminal’s roof. The modifications made to the project increased significantly the scale and capacity of the future Pac On Terminal, in comparison to the works started in 2005. As for the costs, they increased fivefold, from 583 million patacas to 3 284 million patacas. Regarding the projected conclusion, it was delayed from beginnings of 2007 to mid-2013.

When GDI proceeded to introduce alterations to the initial project, which made the final configuration of the terminal much bigger, it took the following into consideration: 1) disturbing as little as possible the works initiated in 2005; 2) meeting the needs presented by the ferries operators; and 3) fully using the land allocated to the terminal as well as the manoeuvring basin. According to the Chief of the Executive’s Despacho 68/2000, one of the main tasks of GDI is to carry out in-depth studies assessing the launch of large scale projects. Also, the technical recommendations issued by the International Federation of Consulting Engineers and the basic management principles suggest the first task to accomplish in a project is the definition of its purpose, need and objective. In other words, the scale of Pac On Terminal could only be scientifically defined after the conclusion of the studies to estimate the volume of passengers. Considering that both the purpose and the objective of the project have already been established, respectively as establishing a main border gateway and building a port, GDI should have proceeded to in-depth studies regarding the future passenger’s flows. But GDI didn’t do it nor took into full account two important aspects: 1) that other major transport infrastructures, namely the existing Maritime Terminal of Porto Exterior and the Macau-Hong Kong-Zhuhai bridge, under construction, could take away part of the new terminal potential users; 2) the possibility of greater economic benefits that a phase by phase building and operation model may bring. Considering the facts above referred, there’s a risk that Pac On Terminal, as a main border gateway, would not be able to cope with the passenger flows or, on the contrary, the terminal could be oversized, wasting financial resources (see. 3.1 of the report).

1.1.2 Budgeting and financial programme

GDI didn’t estimate the required total expenditure for the expansion of Pac On Terminal — none of the expense proposals GDI successively presented for approval was accompanied by any information on the total expenditure; the same happened with the yearly budget requests successively presented to the Finance Department for the preparation of the Investment and Expenditure Plan for the Administration Development. The absence of such important financial information impeded the decision maker to have a complete vision on the financial consequences resulting from any of his approving decisions; the same entity was also unable to fully assess the economic benefits of the project; and, there were no clear and correct financial indicators for the purpose of costs control during the execution of the project. Summarizing, the financial management department had no relevant information for allocating the public resources properly and, more seriously, the Government of Macau was unable to evaluate and plan long-term policies because it has no reliable and precise information on the respective financial commitments (see 3.2. of the report).

1.2 Audit suggestions

(1) Any large scale transport infrastructure should be based on comprehensive and in-depth studies and on the evolution of passengers volume estimated according to scientific methods; factors like the pace of the works, the costs and other associated factors should also be taken into account. Also, the projection of evolution of passengers volume should be broken down and related to the pace of the works in order to assess whether the model of building and operation by phases could be adopted. Between the beginning of planning and the approval of the final project, any significant changes of the relevant factors should result in analyses and reviews timely carried out to assess their impacts, in order to avoid risks of over projection, which would cause wastage of public resources, or, on the contrary, of under projection, making the infrastructure unable to cope with future demands.

(2) The total costs of the project should be scientifically estimated during the preliminary works. Afterwards, the costs estimate should be adjusted and updated along the development of the project, so that it would become gradually more accurate. Concerning the preparation of Investment and Expenditure Plan for the Administration Development, the leading department of the project should comply with all the applicable legal and administrative rules and use the most updated financial information to conduct the total costs estimation.