GNIC demands $79M for unapproved work on MV Kimbia

Jun 09, 2013 News

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 “It’s like a mechanic charging you more money for extra work done on your car which you did not authorise,” Govt. official.

A row is brewing between the Guyana National Industrial Corporation (GNIC) and the Transport and Harbours Department (T&HD) over repairs to the MV Kimbia.
The main bone of contention is an additional $79M being requested by the GNIC for additional repairs which the T&HD is saying were unapproved.

In fact the T&HD is sticking to the original contract sum of $118M and is only prepared to approve an additional $10.8M for variations.
And while the bickering is continuing, the vessel’s return to operation is delayed, resulting in extended hardship for residents of the North West District.
From all indications, the GNIC took the initiative and went ahead and effected critical repairs that were way above the contracted sum, a move that has not gone down well with the T&HD.
In November last year, GNIC was awarded the contract to repair the vessel, which has been plying the North West District for the past 20 years.
Correspondence seen by this newspaper revealed that the GNIC and the Transport and Harbours Department entered into an agreement on November 5, for the docking of the boat at a contract sum of $118M.
The vessel entered the GNIC dockyard on January 13 and the duration of the repairs was for 70 days.
In April, the GNIC, through its Shipyard Manager, Ronald Bourne, wrote to the T&HD informing them that repair works to the vessel had been held up, pending T&HD’s approval of variations to the original scope of works detailed in the contract.
According to the GNIC, the parties had agreed that the works were “critical and necessary for ensuring the seaworthiness of this passenger ferry.”
GNIC outlined that the urgency of the repair job was evidenced by the March 18 visits to the vessel by President Donald Ramotar and Public Works Minister Robeson Benn to get a firsthand look at its condition.
The contractor noted that following that visit, the company in consultation with the T&HD Project Manager and Chief Mechanical Engineer, took the initiative to proceed with the work with the expectation that there could be variations.
According to the GNIC, despite its best efforts and to avoid any compromise with regards to the safety of the vessel, approval was sought for the T&HD’s urgent approval to proceed with the additional works needed, over and above the original contract price.
This was to facilitate the safe and timely completion of the vessel for re-delivery to the T&HD by May 24.
But T&HD noted that to date, the contractor (GNIC) has only executed 79 per cent of the total contracted works which is equivalent to $93.7M of the total contract sum.
But the T&HD pointed out that while it is aware that some variation works were necessary, it was only prepared to seek approval for an additional $10.8M.
“As far as we are aware no approval was granted for the variation works that were executed by your organization,” the T&HD General Manager Marcelene Merchant wrote to GNIC Chief Executive Officer Clinton Williams.
A government official has questioned, how, after inspecting the vessel and providing an estimate that culminated in a contract amounting to $118M, could the GNIC increase its charges by so much?
“It’s like a mechanic charging you more money for extra work done on your car which you did not authorise,” he explained.
Up to press time yesterday, this newspaper could not ascertain if a compromise had been reached between the two sides, but the vessel remained in dry dock while the residents of Region One continue to face the hardships.
They have been forced to rely on the much smaller Lady Northcote and other private vessels at great costs to get to and from the district.
“The President went to the dockyard and promised to have the vessel repaired for the benefit of the residents of Region One and up to now the people are still waiting,” a resident told this newspaper.
Following a visit to the dockyard in March, Minister Benn had said that there are concerns about the age of the cargo vessel which services the North West District. He noted that the docking of the vessel may very well be its last for North West duties.
Benn had explained that the severe marine conditions along the North West route coupled with the age of the vessel make it unwise for the vessel to continue plying that route in the long term.
Another Region One resident explained that with the vessel out of operation, persons transporting goods to and from the region are suffering significant losses and the prices for some basic commodities are soaring.
“Several persons who don’t have big money to pay to use private vessels are left stranded and businesses are suffering,” the resident explained.
But the non-approval of funds to cover the variation works to the MV Kimbia is not going down well with employees of the T&HD, who believe that the government is being biased with respect to the distribution of subsidy to certain state-owned entities.
“The government gave GuySuCo more than $1 billion and GPL $10 billion in subsidy to run their operation. Transport (and Harbours Department) has been allocated insufficient funds to run an entire fleet of vessels, which is not fair, to sustain water transportation in this country. This situation is certainly hurting the image of the T&HD,” a senior official declared.

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