Transport and Hydraulics Minister, Robeson Benn on Thursday announced that government has terminated the US$15.4 million Amaila Falls road project it signed with Makeshwar Fip Motilall of Synergy Holdings in March 2010, owing to what he described as a “fatal flaw” in providing a performance bond.At a press conference to brief the media on the decision, Minister Benn said that government through the Public Works Ministry has terminated the contract of Synergy Holding Inc for the construction of the Access Road and Transmission Line-Clearing Project.
“This decision is in accordance with article nine 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,” Minister Benn related.
According to the transport minister, the agreement included the provision of 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 for the period of the execution of remaining works and the defects liability period.
As of December 2011, the contractor had completed only 40 per cent of the works despite repeated urgings and interventions from the project engineers and the consulting firm to have the project completed. The termination of the contract will result in the government taking certain actions including seizure of all pieces of equipment and other property used by the contractor, seizure of the contractor’s retention sum, the application for liquidated damages at the rate of US$10,000 per day from January 1, 2012 to the date of termination and, seizure of the contractors existing performance bond.
The transport minister explained that the absence of a performance bond was compounded by project delays and other setbacks leading to the eventual termination of the contract. “But we cannot have a project continuing without the surety of a performance bond.”
Asked to provide an estimation of the sum of money paid so far to Synergy Holdings, Minister Benn stated that “We will refine all the details with respect to the payments made and provide that to the media in a few days time”. He said there are issues relating to measured works, advances made and the clarification of works completed and the quality thereof by both sides. Transport and Hydraulics Ministry Permanent Secretary, Balram Balraj has since held a meeting with the consulting and oversight engineers to the project with a view to ascertaining the costs, and more particularly to put arrangements in place to securing the work sites. In relation to the performance bond, Minister Benn said it was a prerequisite to the contract that the company establishes this with a financial institution which provides such insurance services.
“So that if the project runs into this type of distress, you can make a claim against the performance bond, so we have made such a claim,” Minister Benn disclosed.
Due to the agreement signed in December 2010, renewing the deadline for the project, a new performance bond should have been in force by January 10, failing which actions to terminate would have been pursued.
Responding to queries on whether the ministry was in a position to complete the project, Minister Benn explained that government had advertised for other components of the project. In discussions with Synergy, they had entered into agreement to have one of the components completed through a bilateral arrangement with another party.
However, government can attempt to negotiate with the non-offending party for suitable arrangement to have their sections completed, or take the option of completing the project with the inherited equipment.
Minister Benn maintained that government has always had a no-nonsense approach, and has always ensured that national or non-national contractors honour their obligations. “It is not unusual for contracts to run into distress for various reasons; sometimes it’s weather, sometimes it’s terrain and fault on the contractor side for engineering management, experience and capability. But we try to work with people. Critically and fundamentally in the country’s interest; we have been trying to develop national contracting capacity,” the transport minister stressed. Government has recently seized over US$284,000 from an errant contractor, Seereram Brothers for similar contract breaches relating to performance bonds. BK International also lost $20 million for one week of work not completed.
“This decision is in accordance with article nine 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,” Minister Benn related.
According to the transport minister, the agreement included the provision of 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 for the period of the execution of remaining works and the defects liability period.
As of December 2011, the contractor had completed only 40 per cent of the works despite repeated urgings and interventions from the project engineers and the consulting firm to have the project completed. The termination of the contract will result in the government taking certain actions including seizure of all pieces of equipment and other property used by the contractor, seizure of the contractor’s retention sum, the application for liquidated damages at the rate of US$10,000 per day from January 1, 2012 to the date of termination and, seizure of the contractors existing performance bond.
The transport minister explained that the absence of a performance bond was compounded by project delays and other setbacks leading to the eventual termination of the contract. “But we cannot have a project continuing without the surety of a performance bond.”
Asked to provide an estimation of the sum of money paid so far to Synergy Holdings, Minister Benn stated that “We will refine all the details with respect to the payments made and provide that to the media in a few days time”. He said there are issues relating to measured works, advances made and the clarification of works completed and the quality thereof by both sides. Transport and Hydraulics Ministry Permanent Secretary, Balram Balraj has since held a meeting with the consulting and oversight engineers to the project with a view to ascertaining the costs, and more particularly to put arrangements in place to securing the work sites. In relation to the performance bond, Minister Benn said it was a prerequisite to the contract that the company establishes this with a financial institution which provides such insurance services.
“So that if the project runs into this type of distress, you can make a claim against the performance bond, so we have made such a claim,” Minister Benn disclosed.
Due to the agreement signed in December 2010, renewing the deadline for the project, a new performance bond should have been in force by January 10, failing which actions to terminate would have been pursued.
Responding to queries on whether the ministry was in a position to complete the project, Minister Benn explained that government had advertised for other components of the project. In discussions with Synergy, they had entered into agreement to have one of the components completed through a bilateral arrangement with another party.
However, government can attempt to negotiate with the non-offending party for suitable arrangement to have their sections completed, or take the option of completing the project with the inherited equipment.
Minister Benn maintained that government has always had a no-nonsense approach, and has always ensured that national or non-national contractors honour their obligations. “It is not unusual for contracts to run into distress for various reasons; sometimes it’s weather, sometimes it’s terrain and fault on the contractor side for engineering management, experience and capability. But we try to work with people. Critically and fundamentally in the country’s interest; we have been trying to develop national contracting capacity,” the transport minister stressed. Government has recently seized over US$284,000 from an errant contractor, Seereram Brothers for similar contract breaches relating to performance bonds. BK International also lost $20 million for one week of work not completed.
Finally the govt has taken some action into this cause this man is dragging his foot on this work which is beneficial to the guyanese people.
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