US$42M transmission lines…Chinese spare parts trader awarded US$42M contract for transmission lines, sub-stations

May 29, 2016 News

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Consultants hired to supervise an $8.4B (US$42M) project to build new power transmission lines and seven sub-stations have written a scathing report on a Chinese contractor that was awarded the contract.

The project was commissioned in December 2014 by the previous Government. There are questions about the quality of work.
It was touted as a project to increase the efficiency of the inter-connected power system on the coastlands in Demerara and Berbice. However, there have been questions about costs and quality of the work.
According to the final report by Caribbean Engineering and Management Consultants, Inc. (CEMCO) which was teaming up with Canadian firm, SMP Engineering, to overlook the project, China National Machinery Import & Export Corporation (CMC) was awarded an EPC (Engineering, Procurement and Construction) package.
However, that firm is not a construction company. Rather, it is mainly a trading company for the export of Chinese engineering products.
The final report said that it appears that pre-qualification or post-qualification assessments were either not performed or inadequately performed during the tender and selection phase of the project.

The evidence was clear that CMC was ill-prepared for what it takes to run a project of this magnitude.
“The contractor engaged other Chinese firms to perform all aspects of the contract save for purchasing of goods for the contract and even this aspect was not adequately performed, evidenced by shortages of materials and factory defects.”
The report, which was seen by Kaieteur News, would come to light at a time when CMC has submitted bids for a major US$18M project with the Guyana Power and Light Inc. (GPL), the same state company worked with to build the sub-stations and new transmission lines.
According to the report of the consultants, GPL benefitted from a US$39.6M loan to the
Government of Guyana (GOG) from the Export-Import Bank of China, for an Infrastructure Development Project (IDP).
This entailed the development and expansion of GPL’s high voltage 69 kV transmission lines and associated 69/13.8 kV substations; the interconnection of the Berbice Interconnected System (BIS) and the Demerara Interconnected System (DIS), and the installation of a Supervisory Control and Data Acquisition (SCADA) system to help control the network.
CMC was contracted for US$33.9M together with a provisional sum of US$5.1M to cater for anticipated increases in quantities; the contract duration was set at 912 days. The contract was signed on October 28, 2009.

The consultants said that they found that the work contract with CMC was signed approximately nine months before funds became available.
“…It appeared both the contracting parties had anticipated an extended day in this event but had catered for a period of only five months (150 days) as is noted in the contract agreement.”
However, delays resulted in a claim for an increase of the contract price by US$3.2M.
The report disclosed that there were several delays during the initial and preliminary and final design phase of the contract some of which were blamed on GPL and others as a result of extended period of time for finalizing major changes in the scope of works, mainly with regards to substations.
The delays during construction were due mainly to difficulties in locally procuring poles for the construction for transmission lines but also directly attributable to unsatisfactory performance of the contractor in the construction processes and misconception of the extent of time and other resources required to construct the substations as well as cash flow issues possibly due to delays by the employer to make payments on time.
The report of the supervising consultants also noted that materials and equipment supplied by CMC did not confirm to the required standards.
“However, there were discrepancies in the employer’s contract documents in themselves and the CMC bid that was accepted. This has affected the strict imposition of a specific set of international standards…”
Among other things, the contract affected the proper testing of materials.
The consultants noted, however, that “some” of the materials supplied and tested to Chinese standards, are similar to those tested to IEC standards.
The report also expressed concerns over the use of pine poles from the USA in which there was no opportunity to assess whether they were appropriate for the local environment.
“Post commissioning failures of the 13.8kV breakers are a concern. In one instance the nature of the failure was equivalent to a recall. While repairs were completed by the manufacturer at their cost, CMC has not provided any information from the manufacturer requested by the consultant.”

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