– Brassington
The government yesterday defended the award of the US$15 million contract for the first phase of the Amaila Falls Project to Synergy Holdings Inc, saying that the firm submitted the most viable and lowest-priced proposal among bidders.
At a hastily called press conference at the Finance Ministry, Finance Minister Dr Ashni Singh and CEO of the National Industrial and Commercial Investments Ltd (NICIL) Winston Brassington singled out the Kaieteur News for what they termed “unsubstantiated” and “misinformed” reports about the project, while attempting to set the record straight about the award of the contract.
The contract has been faced with public scrutiny, including questions about the firm’s experience in road building. Brassington stressed that the contract was awarded in accordance with the procurement laws and the Auditor General was present to observe this. He also said that Synergy has built roads in Florida and Georgia and has engineers on its team with experience in massive projects.
A statement from the Finance Ministry explained that while 17 firms had registered interest in the project, only four–including Synergy–had submitted proposals. The other bidders were: a consortium comprising B&J Civil Works, Ivor Allen & Dynamic Engineering Co Ltd; BK International Inc; and Roopan Ramotar. These entities bid US$16,650,000, US$21,037,500 and US$ 26,000,000, respectively. Synergy’s bid was US$15,400,000, and while it was higher than what the government had estimated for the project, Brassington said this was not unusual when there was a public open tender.
The Finance Ministry said Synergy’s proposal “was assessed as being the most compliant, viable and lowest-priced one with the components of the proposal showing a clear understanding of the project scope and a comprehensive work plan of the activities in order to achieve the deadline of eight months.” Further, it said the proposal also included the construction of a permanent steel superstructure across the Kuribrong River, as opposed to a multi-cell pontoon crossing proposed by the other bidders. “Before an evaluation of the proposals was undertaken, the persons submitting proposals were first examined to determine whether they satisfied the pre-qualification criteria/process which was set out in the advertisement and the tender documentation,” the ministry explained. It noted too that “the prequalification process” was an assessment of the (i) applicable experience of the potential contractor (ii) availability of equipment, access to materials, adequacy of personnel (including technical personnel) of the potential contractor to perform the job and (iii) capacity of the potential contractor to undertake the scope of the works within the allotted timeframe. The pre-qualified proposals were subject to final evaluation on the basis of price (70 percent) and the (work plan), the ministry added.
According to the ministry, the road contract, which was executed with Synergy on March 18, 2010, contains “stringent provisions for timelines, submittals, approvals and liquidated damages.” A still-to-be-selected engineering firm, from four submitted tenders, will provide general oversight of the works carried out by Synergy Holdings, it added. The firm, together with Sithe Global Power LLC (the project sponsor) and the requisite local agencies and bodies, such as the EPA, will review and approve the submittals.
Brassington explained that prior to the award of the contract, a 10 per cent mobilisation bond (US$1.5 million) and a 10 per cent performance bond had to be paid down by a local insurance company as security on the project. He disclosed that the Hand-in-Hand Insurance Company made the bond payments and would have done its own due diligence on Synergy Holdings. He added that whatever money is advanced by the government is covered by a bond and whatever sums are subsequently paid are based on the level of completion of the project.
He said the project is continuously supervised and the system is such that the government never pays for more than what has been completed. He stated if the party fails in the contractual obligation, notice is given and then the contract terminated. According to him, if this is done, government keeps the performance bond and what is left of the mobilisation bond.
According to him, the cost of building the project and the cost of the returns from those who invest in building the project are two factors that are crucial to determining how much is paid as the annual tariff for the project. “The more money that can be put from the public sector helps to reduce the average cost of the capital for the project and, therefore, the tariff,” Brassington said. He said the plant will result in the drop in electricity costs by some 40 per cent upon its completion
Meanwhile, Brassington said that project sponsor for the construction of the Amaila Falls Hydro-Electric Power plant is Sithe Global Power, LLC, which is an international development company engaged in electric generation facilities around the world. He said that this is a subsidiary of the Black Stone Group, which manages funds and investments worth billions of dollars.
In relation to accusations that Synergy President Makeshwar Fip Motilall was a tax delinquent in the USA, Brassington explained that Motilall has said that his lawyer filed a claim with the city asking for an assessment of the valuation on which the taxes are based. Brassington added that this move was based on the feeling that with the plummeting prices of real estate, some revaluing may need to be done.
Meanwhile, Singh, while expressing his disappointment in the assertions made in the press, stressed that the government is fully committed to the project. He said negotiations are continuing with the Inter-American Development Bank and the China Development Bank, to secure funding.