The Government of Guyana says it has been making moves since 2022 to stabilise the supply and price for construction aggregate and this has seen open tendering and single sourcing.
The Ministry of Public Works, in a release yesterday, pointed out that the significant increase in public and private sector works as a result of the country’s booming economy, placed a tremendous demand on the local aggregate – crusher run and stone – supply which saw prices in some places, increasing by as much as 100 per cent.
During 2022, in an effort to increase its awareness of the capacity of the current market, government met with several prominent aggregate providers/quarries as well as new quarry operators, to ascertain their capacity and logistical challenges. In addition, contractors were also given the opportunity to import aggregate material in an effort to meet the demand and to keep prices competitive, the release noted.
It was subsequently discovered that the local market was unable to service the demand which resulted in among other things, steep price increases.
In November 2022, the government also sought to determine the short- and medium-term requirements for aggregate and the Ministry of Public Works (MoPW) Works Services Group determined the following: In 2020, the estimated/established demand was 61,300 metric tonnes (mt); in 2021- 401,700 mt; in 2022 – 1,337,000 mt; in 2023 – 2,521,000 mt; and in 2024 – 3,220,000 mt.
Consequently, to help support the experienced and projected demand, in November 2022, MoPW conducted a public tendering exercise for the supply of the following material: Lot 1 – 200,000 Tons Grade ‘A’ Crusher Run; and Lot 2 – 100,000 tons of ¾-inch minus stone (NPTAB # 167/2022/31). This process yielded a participation rate of 8 bidders and was awarded at a negotiated price of $9,000 per ton for 200,000 tons. This still resulted in a deficit of over 1,100,000 tons.
According to DPI, during the period while the public tender was ongoing, there was much outcry country-wide in the construction and associated sectors at the high prices for aggregate. This, it explained, drove up the cost of construction for both the government, private sector, and residential construction. In fact, in December 2022, while the procurement was being formalised for the Open Tendering Exercise, the aggregate shortage was becoming even more exacerbated.
As a result, having conducted a public procurement process, and bearing in mind the over 1,100,000-ton supply deficit, the government engaged eight other suppliers with contracts at a much lower price using the Single Source Method of Procurement as catered for in the Procurement Act of Guyana. These suppliers, the release pointed out, were all vetted, samples of their aggregates tested, and rates agreed upon, in keeping with fair market value. This resulted in the procurement of approximately 985,000 tons in an effort to cater to the demand in regions Two, Three, Four, and Six; all of which had extensive projects that were being executed.
Swift
The release noted that government’s initiative on this matter through the servicing of these contracts resulted in a “swift and dramatic” decrease in prices along the coast – in many cases from $16,000 per ton to $11,500 per ton – a nearly 30 per cent decrease which had the effect of normalising the market.
In addition, during this period, the market started to respond. New quarries started to produce, more barging services were made available, importation procedures became more streamlined, and naturally, the private sector suppliers became more efficient and therefore cheaper.
However, although prices normalised, there still was the projected 2.5 million tons of demand in 2023, which drove the government to guard against any future unwarranted price increases. As a result, the release explained that in March of that year, it proceeded with another public tendering exercise for the Procurement of Aggregates (NPTAB # 41/2023/31). This process yielded the participation of 12 bidders with awards to three bidders at between $10,750 and $12,000 per ton for crusher run and $12,000 to $12,500 for ¾ inch and ½ inch aggregates for an overall total of 400,000 tons of aggregate. Additionally, government also engaged in six contracts, again using the Single Source Method of Procurement in accordance with the Procurement Act of Guyana which procures just over 485,000 tons. It must be noted that each of these contracts paid approximately US$50 per ton.
This strategy effectively resulted in approximately 35 per cent of the country’s aggregate requirements being catered for while leaving sufficient space in the private sector to allow for maintained operation and growth, the release said.
The MoPW also said that the management of aggregate is being handled by a dedicated team using peer-reviewed standards and operating procedures, supported by substantial laboratory testing with intermittent audits, both by internal and external parties. It disclosed that the Office of the Auditor General is currently conducting an audit of aggregate contracts and their implementation, to ensure that the ministry is fully compliant with all of the requirements of the laws of Guyana.
