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SIS gets $200m mobilisation fee: while Beetham Wastewater plant agreement states no advance payment

Published: 
Sunday, July 19, 2015
Storage tanks for the billion-dollar Beetham Wastewater Recycling Plant output.

Super Industrial Services Ltd (SISL), the company contracted to design and build the billion-dollar Beetham Wastewater Recycling Plant (BWRP), has already received $887 million in payment for the ongoing project.

At the end of the first quarter of 2015, the project, which is expected to be handed over within the next two months, was 66.1 per cent complete. 

However, according to documents showing payments from National Gas Company (NGC) to SISL, seen by the Sunday Guardian and based on the calculations by one SISL project insider, the contractor has already received over 86 per cent of the total fee for the project.

Former government minister Jack Warner, speaking at an Independent Liberal Party (ILP) media conference on Tuesday, resurrected the SISL/BWRP issue saying then that SISL had already been “paid in full” by state-owned National Gas Company (NGC) for the contentious project. The project was officially awarded to SISL on April 22, 2014, and carried a rigorous 18-month construction schedule. 

According to documents received by the Sunday Guardian, the BWRP is expected to be completed by September 2015 but carries a 21-day proving period, so actual completion of the project is not expected until October 21. 

The contract also stipulates that SISL must operate and run the BWRP for a further five years with no major hiccups before it is fully handed over.

President of NGC, Indar Maharaj, has since denied Warner’s claim in a brief text exchange with the Sunday Guardian. When asked if SISL had been fully paid for the billion-dollar project, Maharaj texted that that was “absolutely not true!”

When pressed further about the status of the project, Maharaj directed all questions to his corporate communications team, Roger Sant and Charmaine Mohammed.

The Sunday Guardian then emailed the pair the following questions:

-Has the contractor (SISL) been paid in full for that project as Mr Warner has alleged?

-If yes, is it customary for contractors to be fully paid before a project is completed?

-How far along is the BWRP? I understand it was broken into phases, can you say what phase the project is at currently?

Sant responded, saying that the office was currently closed and he would not be able to furnish any responses until “next week.”

But the Sunday Guardian has since received fresh evidence that while the Couva-based company did not get the full US$162,055,318.67 ($1,031,166,096.36 TT) as stated in the contract, they have already pocketed $887 milliion TT for the project to date. 

SISL has been paid more than US$107 million ($680,846,350 TT) at the end of the first quarter of 2015; this is in addition to the initial mobilisation fee of US$32,411,063.75 ($206,233,219.36 TT) paid when the contract was first awarded. From ​March to May, SISL also submitted three invoices to NGC of just under US$9 ($57,267,450 TT) million apiece. 

While the latter three invoices submitted are in keeping with the stipulated payment schedule, the Sunday Guardian found that there was never any agreement for the massive 20 per cent mobilisation fee. According to the contract documents, SISL was not supposed to have received that US$32 million first payment. While the financial correspondence between NGC and SISL shows the US$32 million that was paid in April 2014 had to be returned to NGC, financial documents from the first quarter of 2015 indicated it was not repaid to the state company, up to the first quarter of 2015.

According to the documents seen by the Sunday Guardian, there were no consultants or third party oversight on this billion-dollar project up to the end of the first quarter of 2015. This also raised serious concerns regarding the testing of the pipelines, water output, and other aspects of the project.

Contract violations

SISL leads a three-company consortium which includes two foreign sub-contractors—Foster Wheeler and Hyflux. The contract necessitated 34 kilometres of 36-inch pipeline running from a base in Point Lisas to the BWRP in Beetham, Port-of-Spain. According to layout plans, the pipeline will need to pass over several watercourses, including the wide Caroni River. 

The Sunday Guardian learned that the contract called for Horizontal Directional Drilling (HDD), which is drilling under the river, to bridge the banks of the larger watercourses. But SISL insiders have confirmed that the company has decided to bypass that option after attempting to source a local company to assist with the HDD aspect of the job. Last September, the Sunday Guardian reported that SISL had approached several local companies seeking additional expertise to complete the HDD portion of the agreement. Utilising HDD to span the watercourses is in keeping with local and international environmental regulations.

By February 2015, reports surfaced that the Environmental Management Authority had stopped SISL workers from backfilling land in the Caroni Swamp as several workers were seen emptying hundreds of crocus bags of sand. There was no information forthcoming as to whether this work was connected to the BWRP project, but an SISL insider has told the Sunday Guardian that the company is “no longer pursuing” the HDD option.

Documents received by the Sunday Guardian also show that NGC has already paid US$160,080.43 (TT$1,018,599.75) for laboratory equipment and apparatus for the incomplete project. 

The SISL proposal indicated that two reinforced concrete storage units should be installed at the Point Lisas end of the pipeline project. The Sunday Guardian, however, has discovered that instead of the reinforced concrete tanks that were stipulated, SISL has installed cheaper steel tanks.

The Sunday Guardian also received a copy of the December 2014 BWRP Water Quality report sent among the consortium companies, in which Hyflux indicated that the water quality from the Beetham Waste Water Treatment Plant (BWWTP) will impact the BWRP’s ability to meet its own output parameters. 

The SISL then requested a detailed report from Hyflux which was sent by February 4, 2015.

In response to the information in that report, SISL then instructed Foster Wheeler to cease all activities related to the Co2 and Lime Dosing aspects of the project instead of addressing Hyflux’s concerns.

“SIS has advised FWU to use the existing geotech data for the BWRP site. SIS and FWU agreed to drive test piles to validate the Lime and Co2 foundation design/parameters. On 23-Feb-15 SIS advised FWU to stop all engineering activities related to Lime and CO2 as of the 24-Feb-15,” the report states.

This has now raised serious internal concerns about the final water quality output after the plant is delivered to the Government. The Sunday Guardian made three attempts to reach SISL chief executive officer David Lumsden but was unsuccessful as he was “out of office” for the rest of the day each time. 

Finance Minister out of project

When contacted about the payment schedule of the project, Finance Minister Larry Howai would only say that “the funds for this is not coming from the ministry.” He also advised that the Sunday Guardian contact either the Water and Sewage Authority (WASA) or the Minister of EWR (Environment and Water Resources Ganga Singh).

Several attempts to reach Singh on his mobile phone on Friday and yesterday were unsuccessful.

Industry stalwart weighs in

One construction expert described the industry norm for the award of large-scale government projects.

“At the start, there is an advance of ten per cent which has to be fully guaranteed by an approved bank or insurance company,” he said.

“After a grace period of say three months, the advance is paid back over the next four months by equal deductions from monthly certificates. The advance is then fully repaid after about seven to eight months after commencement. 

“Never is a contractor paid ahead of work done, rather it is ALWAYS in arrears within 56 days of the monthly billing as certified by independent consultants,” he added.

This makes SISL the exception to the industry rule as more than a year after the mobilisation fee was paid, there has still been no repayment from the company to NGC.

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