Govt pulls plug on Amaila Falls Road Contract

Jan 13, 2012 News

Fip Motilall to pay US$120,000 per day in liquidated damages,

Govt seizes all equipment

Government yesterday announced the cancellation of the US$15.4 million Amaila Falls Hydro Project contract it signed with Synergy Holdings Inc, headed by Makeshwar Fip Motilall.
The announcement came from Minister Robeson Benn at his Kingston office. After three deadline extensions Synergy Holdings had completed a mere 40 per cent of the works as of December 2011.

Ministry of Public Works Robeson Benn at the press conference yesterday

One of the many reasons given for the project cancellation which was handed to Makeshwar Fip Motilall in March 2010, under the Bharrat Jagdeo Government, was the repeated urgings by Government and interventions from the Project Engineer and the Consulting Firm to have the project completed.
However, the major reason was Motilall’s failure to secure a performance bond, something that Minister Benn described as a fatal flaw.
Benn, reading from a prepared text, said that the termination of the Contract will result in the Client taking the following actions: Application of liquidated damages at the rate of US$10,000 per day, from January 1, 2012 to the date of termination, January 12, 2012; seizure of Contractor’s Retention sum; Seizure and taking ownership of all pieces of equipment and all other property used by the Contractor on the Amaila Falls Access Road Project and seizure of the existing performance bond.
The existing performance bond was posted by Hand in Hand Insurance Company to the value of 10 per cent of the contract. There were in fact, two performance bonds but one was the security bond. Together they were worth US$3 million.
Benn added that the Ministry of Public Works will be taking steps for the continuation and completion of the remaining works.
The decision is in accordance with Article 9 of the original contract and is also consistent with the terms of the Agreement for Completion executed on December 21, 2011 between the Ministry of Public Works and Synergy Holdings Inc.
The second agreement which was signed by Permanent Secretary in the Public Works Ministry, Balraj Balram for the government, and Makeshwar Fip Motilall for Synergy Holdings Inc. contained a clause headlined ‘Failure to provide a valid Performance Bond’.
Witnessing the signing were Walter Willis and Dr Ashni Singh.
Motilall agreed to “Provide a valid Performance Bond to the Government for the period of the execution of the remaining works and for the Defects Liability,
“Failure of Synergy Holdings Inc to present to the Government of Guyana a valid Performance Bond from an acceptable institution to the value of 10 per cent of the Contract Price on or before January 10, 2012 will result in the immediate termination of the contract.”
Noting that there was a meeting between the Permanent Secretary of the Work Ministry and the consulting oversight engineers to the project to put arrangement in place for the Ministry to take possession of the worksites and assets, Benn said the performance bond given by Hand in Hand Insurance company for Amaila Falls Road Project will also be claimed by Government.
When asked about how much of the contract cost had been paid to Motilall, the Minister said that the figure would have to be carefully inspected before an announcement can be made.
“Government has worked hard at this and other contracts to make it work. There are times when you are disappointed but you have to pick up ourselves and move on. And you have to take the necessary steps to continue.” Benn declared.
Commenting on the advances that Makeshwar Fip Motilall was given for equipment to accelerate the project, Benn said whatever was advance and was spent on equipment, the equipment now belongs to the Ministry and Government.
He said that Synergy Holdings Inc went through a process and won a contract, but the contractor failed in putting together the necessary things in place for the continuance of the contract and has generally failed to perform in the requisite actions.
However, Benn said that the new deadline depends on how soon the operations can be restarted in the field. “The latest information I have was that there was a possibility of making some changes which should not affect any issues in relation to the building of the hydro power dam.”
The Amaila Hydropower Project consists of a hydropower dam, to be built at the confluence of the Amaila and Kuribrong Rivers. The electricity will be generated by specially-designed turbines and delivered to substations in Linden and Georgetown by a new 270 km long 230-kV high voltage transmission line.
In July 2010 the Guyana Government signed off on a loan deal 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 breakdown of the project awarded to Synergy Holdings Inc. states that the upgrade of 89km of road will cost US$3.9M; the 110km of virgin roadway, US$7M; the two pontoon crossings or a bridge US$1.5M and clearing of the roadways US$3M.
The storage dam site of the hydro project would be located near the top of Amaila Falls and would impound the waters of both the Kuribrong and Amaila Rivers.