Synergy Holdings, which was contracted in March 2010 by Government to construct the access road to the Amaila Falls hydropower project has failed to honour one of the terms of a completion agreement reached with Government recently on the project, resulting in Government moving to terminate the construction contract with that company. Late last year, Government summoned the company’s principal, Fip Motilall, and expressed concerns about the pace at which his company was progressing with work on the construction contract. In order to ensure that the pace of work accelerated so that the project could be completed in a timely manner, Government executed an agreement for completion with Synergy, under which the company agreed to certain undertakings.
These undertakings included subcontracting certain sections of the road and providing a valid performance bond to Government to cover the period of the execution of the remaining works and the defects liability period, given that the originally provided performance bond would not cover the entire period of the revised schedule. Under the agreement, failure by the company to comply with these undertakings would result in the construction contract being terminated and certain other measures being instituted by Government.
The new performance bond was required to be supplied on or before January 10, 2012. The company having failed to comply with this condition of the agreement for completion, Government notified the company of the termination of the construction contract and is currently taking immediate steps to invoke the other remedies provided for under the construction contract and the completion agreement.Government remains firmly committed to taking all other appropriate steps to ensure that the road project is completed in a timely manner, in order to allow access for the substantive Amaila Falls Hydropower Project. At a press briefing today Minister of Public Works Robeson Benn explained government’s decision to end the company’s US.4M contract.
“We cannot have a contract continuing without the surety of a performance bond…that is a main issue…it’s a fatal flaw for any project,” Minister Benn said.
“This agreement included, the provision of a valid performance bond to the government of Guyana from an acceptable institution to the value of 10% of the contract price on or before January 10, 2012 for the period of the execution of the remaining works and for the defects liability period, amongst other things,” Minister Benn said. As of December last the contractor, Synergy Holdings Inc, had completed only 40% of the works despite repeated urgings and interventions from the Project Engineer and the Consulting Firm to have the project completed.
“The termination of the contract will result in the Ministry taking the following actions; application of liquated damages at the rate of US,000 per day from January 1 to the date of termination, seizure of contractor’s existing performance bond, seizure of contractor’s retention sum and seizing and taking ownership of all pieces of equipment and all other property used by the contractor on the Amaila Falls Access Road Project,” Minister Benn said. Asked how much money the contractor has received to date, Minister Benn said that in respect of the payments made, the Ministry is in the process of wrapping up all the details which will be provided publicly shortly.
“There are issues with measured works, advance made, clarification of the normal issues of acceptance of measured works by parties, what was done and the quality therein…a meeting will be held shortly with the Permanent Secretary and the consulting oversight Engineer to the project to start the process of tidying up those things, particularly putting the arrangements in place for the ministry to take possession of the work sites and the assets of the project.” Responding to the question as to whether the decision taken is part of a ‘no-nonsense’ approach by the Government, Benn said that the Ministry has always attempted to make sure that national contractors and those who enter into contracts with the Ministry perform.
“We have always had a no-nonsense approach with contractors, however we always take due cognisance of certain issues that would naturally affect the timely execution of large contracts… we have previously seized a large sum of money from a contractor for delays stemming from their end to an ongoing project,” Minister Benn said. The Amaila Falls Hydropower Project, the brainchild of the former President Bharrat Jagdeo, will catalyze a seismic shift in the energy infrastructure of Guyana, in the environment for doing business and in the quality of life in Guyana.
This project will materialize the largest investment ever made in Guyana with more than 2,000 jobs being created during the construction phase, moreso when completed it is expected that it result in annual savings amounting to US5M on the national fossil fuel import bill, generate more than 150MW of power from a renewable source and reduce the cost of power to the final consumer, thereby in turn improving the investment environment, reducing the cost of living, attracting investment, and creating more jobs.
In July 2010, the Guyana Government signed off a loan to build the project and formalize the cooperation between the Guyana Power and Light Company, Sithe Global, China Development Bank and China Railway First Group Company Limited. The project is also expected to transform Guyana from a country that is completely dependent on fossil fuel sources for electric energy to a country that utilizes only renewable sources for the national power grid, along with the establishment of a prototype for future hydropower projects, whether to meet expanded domestic demand or for the export market.
