THE PRICE IS THE ISSUE

Jan 09, 2011 Features / Columnists, Peeping Tom

A letter writer on Friday contended in this newspaper that the Guyana Power and Light was sent a proposal for the supply of additional generating capacity at a cost which would have been US$3M less than what they are to pay for a new plant which is being procured from Wartsila. It is further contended that the plant to be supplied under this counter proposal would have been similar to the one supplied by Wartsila.
This has raised a number of other questions concerning the recently concluded deal between the power company and the Wartsila firm, and begs the question as to what extent the GPL seriously considered the alternative proposal which it is claimed would have allowed the supply of the plant at a far cheaper cost, and in a shorter possible time.
When the deal with Wartsila was announced, it was said that it formed part of an extension of a previous contract, and explained why there was no competitive bidding. It was also revealed by the authorities that the price which forms part of the contract with Wartsila was locked-in.
This may well be so, but having had an alternative proposal made, the authorities must now explain a number of things, given the variation in prices between the two proposals – a variation which we are told was to the tune of US$3M.
Obviously, GPL could not have simply handed the contract to the alternative bidder. The procurement laws would have necessitated them having to go out to bids. They would have also needed to carry out due diligence on the firm making the alternative proposal to establish the capability of the person to supply the said equipment as well as the accompanying support and technical services. So it is not a clear-cut case of the GPL simply going with the alternative proposal.
However at the minimum, the fact that the GPL was in receipt of a proposal which was US$3M less for the same equipment that is to be supplied by Wartsila, this fact alone should have a review of the locked-in price and an opening of negotiations with Wartsila in order to see whether they would have been willing to offer a discount to match the price quoted by the alternative proposal.
This is where GPL needs to answer some questions. Did it inquire as to how someone could have offered a price which was US$3M less than Wartsila when it was the said Wartsila that would have also manufactured the plant being supplied under the alternative supplier? Did it reopen negotiations with Wartsila on this question, as would be expected in the circumstances? Or did it feel that there was no way the person making the proposal could have supplied the generating equipment and the support services at the price quoted? Did it examine the locked-in price to determine whether it was overpriced and whether a better deal could have been had? How did it determine the locked-in price and whose opinion was consulted in signing the original contract?
GPL, in light of the claims now being made, needs to explain itself. It needs to offer information that would disabuse the public of any false notions that it did not secure the best deal for Guyana in the circumstances.
This is the time for candidness. This is the time for all the facts to be laid on the table so that the public can decide for themselves whether the interests of the public were secured in the instance of the GPL purchasing additional generating capacity from a firm which has generally had a good track record in Guyana. This record however is not the issue, the price is.

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