JSC told of ‘colourful saga’ behind highway project

The content originally appeared on: Trinidad and Tobago Newsday

The Land and Physical Infrastructure JSC chairman, Independent Senator Deoroop Teemal. – File photo courtesy Office of the Parliament

MEMBERS of the Parliament’s Land and Physical Infrastructure Joint Select Committee (JSC) were told on March 20 about a “colourful saga” behind the 2010-2023 Solomon Hochoy Highway extension project.

This conversation between committee members, National Infrastructure Development Company (Nidco) and Works and Transport Ministry officials included decisions taken about the project the day after the UNC-People’s Partnership (PP) coalition government assumed office in May 2010, questions over the suitability of the project contractor chosen by the PP – Brazilian firm OAS Construtora – and expenditure of money related to the project during the PP’s tenure.

The conversation dwelt heavily on a report on the project that Nidco submitted to the committee last year.

JSC chairman Independent Senator Deoroop Teemal asked Nidco chairman Herbert George if the word “saga” was the best way to describe matters related to the highway from 2010-2023.

George replied, “I thought the history of the project was quite colourful.”

He described it as the most significant infrastructural project ever undertaken in Trinidad and Tobago.

“It started with much expectation.

“Before long, it ran into difficulties: lots of protest action that delayed execution. Then there was this international company (OAS) engaged in the execution of the project that appeared to have been carefully chosen and one that ran into financial difficulties, what you would probably call bankruptcy.”

George said that company had to be removed.

“But prior to that there were two addenda that varied the execution or the proceedings and that large company, with so much promise, was there seeking to be extricated from the project We were almost facilitating it.”

Contract addendum 1 agreed that the upgrade of the road section from Dumfries Road to Paria Suites would be included in the contractual scope of works.

George said this section of road was not part of the original contract.

Addendum 1 said Nidco would pay an additional $108.8 million to OAS for this part of the project.

The original cost of the project before the May 24, 2010 general election, under the PNM government, was $3.6 billion.

On March 4, 2011, the PP awarded a design-build contract to OAS for $5.2 billion, and the cost subsequently rose to $7.2 billion.

George said OAS claimed to be having difficulties doing the project and asked the government to scale it back. OAS, he continued, only wanted to be able to do parts of the project and not the entire project as it had agreed to do, in respect of its financial difficulty.

“At one time, they were talking about just tying up things, closing up and going back home (to Brazil).

“We were almost just saying…well, you know…facilitating that.”

He admitted to committee members that Nidco was at a slight disadvantage, because “whereas Nidco has been a prime agent in the execution of the project, the managers who were present during the initial stages of the project are no longer present at Nidco to testify before your committee.”

But George said the company’s records give information about events during the lifespan of the project, which the committee and the population would be interested in.

He reminded JSC members that in July 1996, the PNM government entered into a loan agreement with the Inter-American Development Bank (IDB) to implement a national highway programme (NHP), with the Point Fortin Highway extension being one of three projects to be undertaken under the NHP.

The other two were the extension of the Churchill Roosevelt Highway to Manzanilla and Sangre Grande and a highway from San Fernando to Mayaro.

In 2009, international consultant AECOM was contracted to provide project-management services for preparation of the tender package needed to procure the contractors to carry out the projects under the NHP.

With respect to the Point Fortin Highway extension, he said tenders were received from OAS, GLF Construction Corporation Ltd and China Railway Construction Corporation Ltd.

On May 13, 2010, Nidco’s tender evaluation committee judged OAS the preferred respondent.

George confirmed that Nidco’s board decided not to enter into negotiations with OAS for the project owing to the imminent May 24, 2010 general election.

Against this background, George was baffled as to why on May 25, 2010, OAS received a letter from Nidco informing it of its preferred status and a contract would be awarded to it, subject to the satisfactory conclusion of negotiations.

He said on that date, no works and transport minister was in office to give the green light to such an action, and so: “It ought never to have happened.”

George did not understand why on February 20, 2011, Nidco was initially directed by government to seek funding for the project, but later told the funding would come from cash transfers from the Finance Ministry.

In response to questions from Government Senator Renuka Sagramsingh-Sooklal, George said a total of $3.6 billion for the project was paid for from cash transfers in 2011-2013.

He added that an additional $1.5 billion for the project came from a loan from RBTT (now RBC) in 2014

George told committee members that at Nidco’s board meeting on May 26, 2011, the board was advised that the minister of finance “had agreed to make available the sum of $1.5 billion from treasury deposits to finalise the contract with OAS.”

Winston Dookeran was finance minister at that time. A cabinet committee chaired by then prime minister Kamla Persad-Bissessar was set up to provide ministerial oversight for the project.

Other members of that committee were Dr Roodal Moonilal, Jack Warner, Dookeran, Dr Bhoendradatt Tewarie, Emmanuel George, Kevin Ramnarine and Stacy Roopnarine.

Sagramsingh-Sooklal expressed concern about Nidco’s decision to increase any advance payments to OAS from ten to 20 per cent of the contract value, contrary to FIDIC (International Federation of Consulting Engineers) Yellow Book..

In a statement in Parliament on November 1, the Prime Minister said, “One of the major benefits of utilising FIDIC terms and conditions is that these terms and conditions are standard and internationally recognised.”

But Dr Rowley claimed the PP did not adhere to FIDIC rules.

When the contract was initiated, Rowley said,the PP made advance payments of $856 million to OAS, when the company should have received $428 million.

D’Abadie/O’Meara MP Lisa Morris-Julian and Government Senator Dr Muhammad Yunus Ibrahim found it curious that Nidco was concerned about the quality of OAS’s work on the project despite the company’s being the preferred contractor.

At the end of the meeting, Teemal told the participants the success of the JSC’s inquiry into the project depended heavily on the stakeholders who appear before it.

He said the committee will hold meetings with other stakeholders.