June 19, 2014

We wish to refer to a report in the Kaieteur News of 4th May, 2014, questioning the transfer of 1 acre of land at Lillendaal from NICIL to China Railway First Group (Guyana) Inc. (CRFG). We are pleased to provide the facts on this matter.

In early 2013, on the expectation of the Amaila Falls project starting in late 2013, negotiations were held with CRFG on key matters related to the start of the project that resulted in two pieces of land being committed to CRFG. The key matters that were negotiated with CRFG related to:

  • Engineering, Procurement and Construction (EPC) Contract Price Validity: the price on the contract with CRFG executed in September 2012 expired in June of 2013; in early 2013, given the expected delay of postponing Financial Close until the latter part of 2013, it was necessary to have the EPC price extended.
  • Access Road: Completion of the access road was a pre-requisite to starting construction of the main project; local contractors were unlikely to complete the most difficult section of the road  (Section 7) in 2013 and it was, therefore, considered prudent to engage  CRFG to complete the road, but at a reduced price to their tender.
  • CRFG was already identified as the contractor for the Amaila Falls Hydropower Project and established as a much more experienced contractor. The satisfactory completion of the road was, also, at the time, a critical component in meeting the deadlines specified for the Amaila Falls Hydropower Project.
  • In the first quarter of 2013, the CRFG agreed to the following terms, approved by Cabinet, for the construction of Section 7 of the road and extension of their price validity on the EPC contract:
  • A reduction of the amount of its original bid of US$11.2M to a cash contract price of US$8.5M.
  • The transfer, by way of Deed of Gift, from government of 2 lots of land --1 acre at Lillendaal (completed) and 7.5 acres at Friendship (in the process of being transferred). The CRFG would use the land at Lillendaal for building their Head Office and the land at Friendship for a materials marshalling yard.
  • A fixed price contract in preference to a measured works contract.
  • The CRFG would extend the price validity of its Engineering, Procurement and Construction (EPC) Agreement for the Amaila Falls Hydropower Project from June 2013 to December 2013. (Ongoing negotiations for the Amaila Falls Hydropower Project have resulted in the extension of the EPC price validity being extended to October 2014.)

The award of the contract to CRFG for Section 7 was a public record with funding approved by Parliament in 2013. In fact, as part of the engagement with the opposition on the Amaila Falls Project, opposition members were afforded the opportunity to inspect the progress of the road.

 It will be recalled that the Minister of Finance, Dr. Ashni Singh, in March 2014, in responding in the National Assembly to questions asked by APNU Parliamentarian, Mr. Carl B. Greenidge, on the cost of the construction of the Amaila Falls Hydropower Project (AFHP) access road,reported that on the termination of the original contract with Synergy Holdings Inc. by the government, represented by the Ministry of Public Works and the National Industrial & Commercial Investment Limited (NICIL), the scope and specifications of the road were revised and amended with respect to negotiations ongoing with the CRFG.

The Minister noted that new and separate contracts were awarded for sections of this road to be constructed under separate tenders. The contract for Section 7 of the road was awarded to H.N Pasha Construction as the lowest bidder. This contract was, however, terminated in April 2013 because of its slow rate of progress by the contractor and on 19th April, 2013, the Ministry of Public Works awarded the contract for the construction of Section 7 to the China Railway First Group (Guyana) Inc. (CRFG), the second lowest bidder.

The Minister of Finance, Dr. Ashni Singh, in the course of the recent budget debate, noted that the government and all of the parties concerned in the Amaila Falls Hydropower Project, including the Inter-American Development Bank (IDB), the China Development Bank (CDB), China Railway First Group (Guyana) Inc. (CRFG), Blackstone and Sithe Global groups, continue to remain engaged in the Project. He advised the Assembly that the government anticipates the imminent completion of the IDBs due diligence of the Project and its consideration by the Bank’s Executive Board by the third quarter of this year.

 

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