$3.7B sea defence contracts...EU may withhold $$billion in funding

$3.7B sea defence contracts…EU may withhold $$billion in funding

Dec 17, 2011 News

…as BK Int’l fails on many projects

The European Union (EU), Guyana’s largest donor for critical sea defence works, says that it could cancel remaining funding for the current sea defence projects. It is blaming the non-execution of some projects and the slow pace of others for which money has already been released.
It is calling for a speeding up of some $3.7B worth of projects which it says are way behind schedule. At fault is contractor B.K. International.

One of the BK International projects

Making it clear that the government may now have to move to seek liquidated damages from the contractor, B.K. International for the incomplete works, EU warned that Guyana faces the very real possibilities of seeing the remainder of funds not being released.
The monies are all grants, which will not have to be repaid, but which comes with monitoring of the works by the EU. It is unclear how many projects are incomplete but officials said yesterday that the number is substantial.
Kaieteur News was told that once the deadline for a project has passed and it has not been completed, no further disbursements can be released from the EU.
The EU believed that the delays were caused mainly by a certain lack of capacity in managing the large portfolio of the contract and to some extent inadequate provision of resources for the completion of the jobs which stretch from Essequibo to Springlands, Berbice.
With Guyana’s heavily populated coastlands below sea level, sea defence works have taken heightened significance for the government especially with claims of rising sea levels.
In addition to the thousands of homes along the coastal belt, the majority of sugar, rice and other farmlands are located there which could all be threatened should there be breaches in the system.
BK warned
Yesterday, Minister of Public Works, Robeson Benn, commenting on the EU statement, said that the matter has been engaging the attention of his Ministry for a while. “There has been a constant review of the projects and if there are options where we could recover monies through liquidated damages, we will pursue them. There have been several notifications to BK over the outstanding works and efficiency.”
He insisted that BK has been made to pay damages for late contracts in the past and this time would be no different if the company falls short. Kaieteur News understands that the contracts were signed over two years ago and were to the tune of €13.6 ($3.7B).
According to the EU statement yesterday, the body has a long history of involvement in the reconstruction and repair work of the sea defences in Guyana.
So far, the EU has contributed $22B (€80M) in grants towards the sector since the mid 70’s, making it by far the largest provider of support to the Government of Guyana in this field.
In addition, the release pointed out, the EU is funding the ongoing Mangrove Programme through the Global Climate Change Alliance at a value of $1.12B (€4.1M), which aims at securing the natural protection from the sea and establishing new mangrove reserves. EU further disclosed that its recent activities include new construction of 1.6 km of sea defence in the areas of Clonbrook, East Coast Demerara, and Springlands, East Berbice; the rehabilitation, upgrading and maintenance of 18 km of sea defence in 31 different locations; provision of supervision services; procurement of supplies and technical assistance for the Works Services Group at the Ministry of Public Works.
On Tuesday and Wednesday, EU and the representatives of BK International and the government carried out inspections on several locations for “provisional acceptance”.
The places inspected included Kitty, Coldingen, Melanie Damishana, Clonbrook on the East Coast of Demerara and Springlands, in East Berbice.
Inspections were also carried out at Uitvlugt, West Coast Demerara and Orangestein, Aurora, Onderneeming, Lima, Walton Court, Johanna Cecelia and Zeelandia, in Essequibo.
The EU statement did not immediately identify the incomplete projects.
Liquidated damages
“While the works at most locations were in an acceptable state allowing for provisional acceptance, at some locations the works could not be taken over, which could result in enforcement of liquidated damages,” the release said.
The EU Ambassador, Robert Kopecký, was said to be encouraging the contractor, BK International, to accelerate the works.
Delays over the last two years, the EU felt, were caused mainly by a “certain lack of capacity in managing the large portfolio of the contract and to some extent inadequate provision of resources.”
“Based on the above mentioned, the Delegation of the European Union in Georgetown encourages its Guyanese partners in the ongoing sea defence projects, both from public and private sectors, to do the utmost to ensure an immediate acceleration of the works, otherwise there is a risk of loss of considerable amounts of funds which would not be in the spirit of the so far very good and friendly cooperation.”
Kaieteur News understands that BK International has applied for a work extension until February but an official close to the projects said that it is unlikely even for that deadline to be met.
The $3.7B projects included two components- new construction which includes rip-rap works and repairs to old concrete and other critical areas.
Should BK International fail to meet the new deadlines, it could see Government being forced to pay for the remainder projects out of the government coffers while at the same time pursue BK International for damages.