$1B over than engineer’s estimate…IDB’s anti-corruption arm launches probe into GPL’s contract award

Dec 25, 2016 News

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The Office of Institutional Integrity (OII), an independent arm of the Inter-American Development

Bank (IDB) that is charged with investigating allegations of fraud and corruption, has started its probe of a major contract for the installation of over 25,000 smart meters and new transmission lines across the coastlands.
The project, part of a bigger one to improve the technical efficiency of the Guyana Power and Light Inc. (GPL), has been generating attention locally not only because of the billions of dollars involved, but with questions raised over the procedures to evaluate the bidders.
The tenders of the rehabilitation project had been opened since February, and were only reportedly granted Cabinet’s no-objection a few weeks ago – more than nine months later.
There has been no official signing of the contract with CMC, the Chinese company that was reportedly awarded the project, as is normal with a state project of this magnitude. It is unclear whether CMC has received any monies as yet.
On Monday, a bidder, Colombian-owned Enrique Lourido, which has partnered with local contractor, Fix It Depot, filed an official protest with OII citing corruption in the evaluation process and raising questions over the fact that CMC was awarded a project that was $1B over the engineer’s estimate. The bidder was the lowest.
An investigation by IDB’s anti-corruption and anti-fraud would effectively halt any disbursements.
IDB has been known to blacklist contractors and ask for retenders when fraud and other irregularities are found with the projects it is funding.
The Parliamentary Opposition has already slammed the delay of the award, noting that it was taking too long and that it appears that something was wrong.

No Announcement
Guyana officially learnt of the award when questions were posed to Minister of Public Infrastructure, David Patterson, during the recent considerations of the national budget in the National Assembly.
Questioned by Opposition Parliamentarian, Juan Edghill, the minister said that China National Machinery Import and Export (CMC) was the lowest responsive bidder.
Patterson was asked to explain the allocation of $1.2B to be plugged into the Power Utility Upgrade Programme (PUUP).
He said that the delay in implementing the project was as a result of the contract only recently being awarded to the Chinese company. Patterson said that the contract cost stands at $4.6 billion. He said that the engineer’s estimate was $3.9 billion,
After providing this information, Patterson was asked to state whether the company was the lowest bidder. “I could indicate clearly that the contractor that was awarded this bid was the lowest responsive bidder.”
A responsive bidder is an entity that would have satisfied all the requirements to be a successful bidder.
Edghill posed the question to Patterson whether he can explain why the evaluators would have chosen a company whose bidding price was almost $1B above the engineer’s estimate.

According to Patterson, the contract is a part of a much larger contract for US$64M and at the time of the tender this was the engineer’s estimate. But there was a delay in terms of the assessment. So when the assessment was done, the cost was determined by the evaluators to be fair and they were recommended to us, not only to the government of Guyana but also to the IDB as well as the EU.”
Both IDB and the European Union (EU) are funding the US$64M power projects.

Evidence of Wrongdoings
A spokesperson for Enrique Lourido and Fix It Depot yesterday disclosed that IDB’s investigative arm has started its probe and has already asked for a number of documents.
“Essentially, our lawyers and principals are talking to the investigators and we have already provided some documents. We have the evidence of wrongdoings. They said that they take any allegations of corruption and fraud very seriously. We believe that we won this contract fair and square, based on the specifications that were demanded and the fact we were the lowest bidder. On top of that, we were never told that we were disqualified or informed that an award was made. That is a breach.”
The spokesperson was also critical of the highly questionable decision by evaluators to up the price by over $1B over the engineer’s estimate, using an excuse of “unforeseeable risks”.
Five companies tendered for the project- China National Machinery Import and Export/Sino Hydro Corporation (China)- $7.1B; Multi Electrical System N.V. (Suriname)- $6.4B; China National Machinery Import and Export (CMC)/China Sinogy Electric Engineering Co. Limited – $4.6B; Cummings Electrical Limited- $3.67B and Enrique Lourido/Fixit Depot- $3.5B.
The award to the Chinese company had raised eyebrows since the company was involved in the construction of seven sub-stations, running new high powered transmissions along the coastland and the laying of two submarine cables across the Demerara and Berbice rivers.
The cable which was laid across the Demerara River was damaged in July under unknown circumstances. This left the East Demerara and Berbice areas without additional power being supplied by the new Vreed-en-Hoop power station for a number of months. It was only fixed, recently.
A key report by CEMCO, the local engineering company that supervised that project, had criticized the quality of work of CMC, including the laying of the submarine cable in the Demerara River.
The utility programme includes targeting loss reduction, rehabilitation and upgrading of distribution networks, upgrade/relocation of distribution transformers, implementation of systems management software and institutional strengthening.
GPL officials this past week confirmed that the power company has started moves to conduct an assessment of the CMC-built sub-stations to determine
GPL officials themselves have been highly nervous about the project and tight-lipped.

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