The story of three contracts to BK …$84M Eccles well unfinished 5 years later

Oct 01, 2017 News

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More than five years after a contract was awarded to contractor, BK International, for $84.2M, a well at Eccles, East Bank Demerara, is unfinished without residents receiving a drop of water.
It appears that there are little efforts or, at the very least, no public update by the Guyana Water Inc. (GWI) to resolve the situation.
This was despite the fact that BK, which prior to these well, had no experience in drilling, has collected $53.1M or 63 percent of the money.
The well is located in the new housing scheme, opened behind the Eccles industrial site, with no activities evident during visits by Kaieteur News this past week.
The Eccles project was among three wells awarded in 2011, for completion by August 2012.
However, only one well, at Hope, East Coast Demerara is reportedly up and running.
The other one, at Mon Repos, East Coast Demerara, is supposed to be located in the compound of the Guyana Livestock Development Authority (GLDA) but was abandoned after technical problems.
BK, which has been under fire for these and a number of other projects, including the access roads to the Cheddi Jagan International Airport, Timehri, was earlier this year ordered to drill a new well at its own costs at Mon Repos.
GWI said earlier this year that BK collected $34M (80 percent) of the $41.6M that had been allocated for that Mon Repos well.
However, an Investigation Report by Chartered Accountant, HLB R. Seebarran & Co. Chartered Accountants, in June 2015, submitted to the then Board of Directors, headed by Ramesh Dookoo, had placed the cost for the Mon Repos well at $75.5M with BK receiving $49.2M.
The situation with the wells and the seeming inaction of consecutive administrations against BK, which has been tendering and receiving more state contracts, despite the non-delivery, have been raising significant concerns, among stakeholder, including contractors.
The accountant’s report, which can be found online, devoted a number of pages to the three wells.
GWI’s management in June 2015, in response to the findings of the Chartered Accountant, insisted that the three contracts were awarded by the National Procurement and Tender Administrative Board (NPTAB) based on their evaluation of a contractor that “had no experience in well drilling.

These contracts were consistently discussed at the level of the GWI Board and there has been consistent agreement to allow the contractor to complete the three wells.”
The report disclosed that the maximum liquidated damages have been applied under each contract which is 10% of the value of works for each of the contract to the total value of $18.6M for the three contracts.
The report said that BK was supposed to fix the Eccles well by the end of April last year.
“At present (in June 2015) the respective status of the contracts are provided in which one well (Hope) is completed, the contractor has been issued an ultimatum to complete remedial and development works on Eccles by April 30, 2016 and they are required to recommence drilling of a replacement well for Mon Repos by April 30, 2016 or the contract will be terminated and legal actions taken against the contractor.”
GWI’s Board of Directors meeting between December 20th, 2012, to April 30th, 2015, spoke of directors’ growing exasperation of the delays in the contracts being delivered.
In a board meeting on November 27, 2014, on the Mon Repos well, it was discussed that there were problems and that a camera could not go past a certain depth.
BK proposed that GWI accept the well since it was meeting expected production.
“A meeting was subsequently held with the contractor who further proposed a ive-year defects liability period. This was not accepted. Opinions were sought on the matter and it was suggested to the contractor that the well be plugged. Contractor agreed to this suggestion and is attempting to contact an expert from Trinidad. A member noted that where there is a structural defect the risk involved must be assessed.”
Five months later, on April 30, 2015, another board meeting heard that nothing much was done in the last month since BK had been focusing on the Hope well.
The accountant report was highly critical of the fact that the contracts for these wells were awarded to BK International in 2011 and were to be completed in August, 2012. It slammed the lax attitude of the Board of Directors.
“These contracts have not been completed to date and the contractor has not been faced with any penalties. The problem with these contacts was that the Board of Director procrastinated and allowed the contractor to determine when the contracts would be finished.”
In fact, the delays, the time spent by management and cost to resolve issues with the contractor has compromised the Board as can be seen board minutes, the accountant.
“Further, stakeholders who were hoping for improved water service continue to wait.
Earlier this year, GWI said that it is still to decide if the new well to be drilled at Mon Repos will be right in the GLDA compound.
Instead of serving only GLDA and its facilities, it is the plan that the new well will be providing service to Mon Repos and its environs.
With regards to the old well, the CEO explained, GWI believed that it could still be used to boost the water supply to the area, following attempts to connect it to the distribution system.
The issue has been a vexing one for GLDA, a key agency of the Ministry of Agriculture.
The new Board of Director, which was installed late 2015- had been addressing the non-functioning well since early last year.
Between February 2016 and this month, GLDA’s Chief Executive Officer, Richard Cumberbatch, had written GWI and Finance Secretary, Dr. Hector Butts, to have the matter resolved.
However, it was not until the matter was made public that any significant movements were made.
The issue has highlighted some of the problems facing the administration with regards to state contracts.
While on one hand, there have been attempts to tighten up on the procurement process, overtime state audits have pointed to weak supervision and even corruption in the tendering and evaluation stages.
State auditors have pointed out cases of significant overpayments, as another ploy by crooked public officials.
State engineers have been singled out for their weak supervision despite being charged with ensuring the country receives value for its money.
Consecutive administrations have been heavily criticized for not coming down hard on contractors who have failed on jobs, in terms of non-delivery or poor quality.
There is little evidence that contractors are being blacklisted for poor work and even less evidence of government’s success in collecting penalties for those contracts.

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