Gail Alexan­der

The Na­tion­al Gas Com­pa­ny (NGC) is mov­ing to re­cov­er from Su­per In­dus­tri­al Ser­vices Ltd (SIS) the costs of com­plet­ing the works on the Beetham Waste­water Project and any oth­er loss­es and dam­ages in­curred as a re­sult of SIS's al­leged breach­es of a bil­lion-dol­lar con­tract for the project, Min­is­ter in the Min­istry of the At­tor­ney Gen­er­al Stu­art Young says.

In a state­ment to Par­lia­ment yes­ter­day, Young re­vealed that NGC, whose man­date was not the pro­vi­sion of wa­ter, en­tered in­to the con­tract for over $1 bil­lion and had paid out over $780 mil­lion to SIS to date–about 75 per cent of the full cost–when on­ly ap­prox­i­mate­ly 40-45 per cent of the project work was com­plet­ed.

With the im­pend­ing ter­mi­na­tion of the SIS con­tract ef­fec­tive De­cem­ber 4, Young, re­lat­ing de­tails of what had led to this, added: "An as­sess­ment is be­ing con­duct­ed by the new NGC board to de­cide what are the next steps to be tak­en with re­spect to this project that has cost over $780 mil­lion. Op­tions in­clude com­mence­ment of ar­bi­tra­tion pro­ceed­ings to re­cov­er dam­ages in­curred and the costs as­so­ci­at­ed with the com­ple­tion of the project. When a de­ci­sion is tak­en with re­spect to the fu­ture progress of this project we'll in­form the pub­lic."

The NGC, un­der the past Peo­ple's Part­ner­ship (PP) ad­min­is­tra­tion's tenure, had award­ed a con­tract to SIS for the de­sign and build of the plant, to­geth­er with the as­so­ci­at­ed pipelines and wa­ter stor­age fa­cil­i­ties. The pur­pose of the project was to re­cy­cle out­put wa­ter from WASA's ex­ist­ing waste­water treat­ment plant to in­dus­tri­al wa­ter qual­i­ty stan­dard and to take the pipe-treat­ed wa­ter from Beetham to the Pt Lisas In­dus­tri­al Es­tate us­ing new­ly built pipeline in­fra­struc­ture.

Young said re­quests for pro­pos­als for the project were is­sued on De­cem­ber 10, 2013. The con­tract was is­sued on March 10, 2014, in the sum of ap­prox­i­mate­ly TT$1,037,154,560.00 (USD$162,055,319).

He said, "It's note­wor­thy that SIS wasn't the low­est bid­der on this project. In fact, SIS's bid was TT$464,196,390 (USD$72,530,686) more than the oth­er bid­der.

"It's al­so note­wor­thy, the last ad­min­is­tra­tion paid a 20 per cent mo­bil­i­sa­tion to SIS. It is not usu­al to have as high as a 20 per cent mo­bil­i­sa­tion fee. In this case, NGC made an ad­vance pay­ment to SIS which was TT$207,430,810.00 (USD$32,411,064).

"A mo­bil­i­sa­tion fee is usu­al­ly worked back through the life of a con­tract, with ap­pro­pri­ate cred­it or re­pay­ment be­ing giv­en to the em­ploy­er as the con­tract is per­formed. To date, none of this mo­bil­i­sa­tion/ad­vance pay­ment, of some TT$207,430,810.00, has been re­paid (or cred­it­ed) to NGC by SIS."

Fur­ther, Young said, to date NGC has paid SIS the sum of ap­prox­i­mate­ly $780 mil­lion (USD$121,745,121.64), with the last pay­ment cer­tifi­cate cer­ti­fied by NGC be­ing for work done in May 2015.

He said on Oc­to­ber 8, 2014, SIS was award­ed a fur­ther con­tract by NGC for op­er­a­tion and man­age­ment of the Beetham Wa­ter Re­cy­cling Plant for a five-year pe­ri­od with a val­ue of ap­prox­i­mate­ly $56.4 mil­lion.

"This con­tract was on­ly for the Beetham plant and not the pipeline to Pt Lisas nor the stor­age at Pt Lisas. The ques­tion is why was NGC utilised as the en­ti­ty to con­tract SIS for the de­sign/build of this bil­lion-dol­lar wa­ter pro­vi­sion fa­cil­i­ty as op­posed to WASA? WASA is the statu­to­ry body charged with the re­spon­si­bil­i­ty for wa­ter sup­ply," he said.

"It has al­so been dis­cov­ered that to date, there is no 'off take con­tract' en­tered in­to for the fi­nal wa­ter prod­uct from this project. There­fore, NGC, whose man­date was not and is not the pro­vi­sion of wa­ter, en­tered in­to this con­tract for over TT$1 bil­lion, pay­ing out over TT$780 mil­lion to SIS to date, and on­ly ap­prox­i­mate­ly 40-45 per cent of the project work is com­plet­ed, when over 75 per cent of the full cost of the project has al­ready been ex­pend­ed from the cash cof­fers of NGC."

Young said the new NGC board was hav­ing an in­de­pen­dent as­sess­ment done of the works per­formed to as­cer­tain the quan­tum and per­cent­age of work ac­tu­al­ly per­formed, since this was nec­es­sary due to the cir­cum­stances. He said SIS be­gan slow­ing down works pri­or to the gen­er­al elec­tion and this be­came even more ap­par­ent af­ter the Sep­tem­ber 7 gen­er­al elec­tion.

"Af­ter elec­tions, NGC re­ceived sev­er­al re­ports from the sub-con­trac­tors of SIS as to non-pay­ment of monies due to them by SIS. On Sep­tem­ber 14, 2015 (one week af­ter the elec­tions), SIS wrote to NGC in an at­tempt to ex­tri­cate it­self from its con­trac­tu­al oblig­a­tions, af­ter hav­ing al­ready been paid $780 mil­lion and on­ly com­plet­ing 40-45 per cent of the works."

(With re­port­ing by Renu­ka Singh)

SIS claims govt in­ter­fer­ence

Min­is­ter in the Min­istry of the At­tor­ney Gen­er­al, Stu­art Young, al­so said yes­ter­day that SIS, in dis­cus­sions about the con­tro­ver­sial project, claimed, "...peo­ple now hold­ing high of­fice in the Gov­ern­ment...have made se­ri­ous al­le­ga­tions about the project and the con­duct of of­fi­cials of NGC and SIS."

As a re­sult, he said SIS stat­ed it was "...rea­son­ably cer­tain that steps would now be tak­en by the State to stop or frus­trate SIS in the suc­cess­ful ex­e­cu­tion of this project."

Young added, "SIS used this as one of its rea­sons for slow­ing down works and even­tu­al­ly re­fus­ing to con­tin­ue the project. (But) There was no ev­i­dence to sup­port this po­si­tion that the new Gov­ern­ment would have stopped or frus­trat­ed SIS from com­plet­ing the project."

He said NGC de­nied any al­le­ga­tions of state in­ter­fer­ence and stat­ed it was com­mit­ted to en­force­ment of the con­tract and it ex­pect­ed SIS to con­tin­ue to de­liv­er all con­trac­tu­al oblig­a­tions in a re­spon­si­ble and time­ly man­ner.

Young added, "There then en­sued an ex­change of cor­re­spon­dence and com­mu­ni­ca­tions be­tween SIS and NGC, where­in SIS claimed that it had un­der­bid on the project at the ten­der stage and it was un­able to con­tin­ue the works with­out a re­view of the con­tract price and project sched­ule and that it could no longer fund the works. This, even though SIS's price for the project was TT$464 mil­lion more than the next bid­der.

"SIS al­so sud­den­ly claimed it had safe­ty and se­cu­ri­ty threats and it used this as its ex­cuse to be­gin the with­draw­al of con­struc­tion re­sources, man­pow­er and equip­ment from the sites on Oc­to­ber 8, 2015," he said.

"De­spite the ex­changes and dis­cus­sions be­tween the par­ties, SIS re­fused to re­new the per­for­mance pay­ment bond and the in­sur­ance cov­er­age that it was con­trac­tu­al­ly ob­lig­at­ed to re­new; this left NGC ex­posed. Ul­ti­mate­ly, SIS in­di­cat­ed it would on­ly com­plete the project on new terms and con­di­tions, in­clud­ing a new project sched­ule, all whilst it with­drew from the project sites.

"As a re­sult of these de­vel­op­ments, NGC, un­der di­rec­tion of its new board sought and ob­tained in­de­pen­dent le­gal ad­vice and moved quick­ly to pro­tect NGC's po­si­tion (and the po­si­tion of the cit­i­zens) with some $780 mil­lion hav­ing al­ready been ex­pend­ed.

"On Fri­day, 20 No­vem­ber, af­ter due and prop­er con­sid­er­a­tion of the facts, failed at­tempts to dis­cuss the way for­ward and the ad­vice ob­tained, NGC gave SIS writ­ten no­tice of its in­ten­tion to ter­mi­nate the de­sign/build con­tract."

He said, NGC, in re­cap­ping SIS's po­si­tion that it was un­able to con­tin­ue with the works, drew at­ten­tion to ac­tions by SIS that "demon­strat­ed that SIS had aban­doned the works or al­ter­na­tive­ly did not in­tend to con­tin­ue per­for­mance of its oblig­a­tions un­der the con­tract."

The com­pa­ny was found­ed by busi­ness­man Kr­ish­na Lal­la, who di­vest­ed the ma­jor­i­ty of his hold­ings to sons Ter­rence and Lin­coln Lal­la. Ear­ly last year both sons were list­ed as the own­ers of the com­pa­ny and me­dia re­ports list­ed Ter­rence as the main own­er of the com­pa­ny

But in a brief tele­phone in­ter­view yes­ter­day, Ter­rence Lal­la dis­tanced him­self from SIS.

"I am no longer in­volved with SIS's busi­ness," Lal­la said.

"I no longer have any­thing to do with SIS and can­not even di­rect you who to talk to there," Lal­la added.