If the Parika Market contractor had covered his contract under special insurance then the government should have levied on it after the fire and re-advertised for the works under a new contract, former Auditor General Anand Goolsarran says.
However, Goolsarran cautions that while the standard bidding documents say that fire is one area covered, it is unclear if this contract had these provisions.
“The contract for Phase II of the upgrade to the Parika Market was awarded to Panko Steel & Fabrication Construction on 2 December 2022 in the sum of $270 million.
The fire is not considered force majeure which is defined as ‘unforeseeable circumstances that prevent someone from fulfilling a contract’. The standard bidding documents provide for the insurance coverage for the full contract sum for loss or damage to the works, plant and materials; and for specific amounts for loss or damage to equipment, property other than plant, materials and equipment, and personal injury or death,” Goolsarran explained.
“It is not clear whether the contract provides for insurance coverage in the above circumstances. We note that the contractor had offered to rebuild the damaged area at no cost to the government, and the latter has agreed to this. If there was insurance coverage, the government should have levied on the proceeds of the insurance policy, terminate the contract, and re-advertise for the works,” he added.
Panko Steel Fabrication and Construction Ltd which had been working on the Parika Market when it went up in flames, will rebuild it at no additional cost to the government, according to the Minister of Local Government, Nigel Dharamlall.
The company had been working on the second phase of the expansion of the market in February when sparks from welding ignited flammable items in one of the stalls. The entire market was ravaged by the ensuing inferno.
A report from the Guyana Fire Service had concluded that the fire was a result of welding sparks coming into contact with combustible materials. Many vendors had recalled hearing what sounded like explosions prior to the huge eruption. According to the vendors, a stall which allegedly sold squibs and other fireworks was located beneath the ongoing welding works, and it is felt that those were the combustible materials that were ignited by the welding sparks.
Dharamlall said that the company has committed to rebuilding it in four months.
“They have a standing contract and whatever losses that was incurred as a result of the fire, they have to cover it… we don’t have an additional contract,” the minister had told this newspaper.
The incident has raised questions as to what happens in the aftermath of a contract being upturned by a major event such as a fire, particularly if the contractor might be liable.
While bidding documents required the company to pledge insurance, it was to cover their bid security and not a disaster. For this reason, they are now solely liable for the completion of the promised works.
Panko was awarded a $270 million contract for the second phase reconstruction of the market. The contract was signed between a representative of the company and Permanent Secretary of the Ministry of Local Government and Regional Development, Prema Ramanah-Roopnarine.
