Govt ‘powerless’ to terminate CHEC Suriname stone imports

CJIA $150M Expansion Project

Government is ‘powerless’ to stop the stone imports from Suriname by the contractor undertaking the single largest project under its command; it has since opted to blame its predecessors—a position adopted despite the fact it had halted the project and amended the Contract, after taking office in May 2015.

GMSA President Eon Caesar

Business Minister Dominic Gaskin

According to Minister of Business, Dominic Gaskin, “Under the terms of the (amended) contract I don’t think that the Government of Guyana can tell them that they can’t procure stone from outside of Guyana.”
This blunt position was adumbrated on Friday when he was asked to respond to the fact that local suppliers have essentially been sidelined in preference for a Surinamese-based company.
The coalition A Partnership for National Unity, Alliance For Change (APNU/AFC) Government after taking office in May 2015, proceeded to halt, then amend, the US$150 million contract for the Cheddi Jagan International Airport (CJIA) Expansion Project, on the grounds that the contract was ‘unfavourable’ to Guyana.
It has now found itself in a position where the contractor—China Harbour Engineering Corporation (CHEC)—decided to bypass local suppliers and inked a US$7.5 million contract with a Surinamese-based company.
Gaskin has since claimed that the arrangement under which CHEC has begun importing stone is a private one and Government cannot reverse or terminate that contract.
He was at the time addressing the media at the AFC’s Kitty Headquarters and was speaking on national issues and the party’s perspective.

Sand v stone
According to Minister Gaskin, “The procurer of the stone was the company that got the contract to build the airport—CHEC—it wasn’t the government of Guyana.”
Asked why the local suppliers—two of whom have lodged formal complaints—have been sidelined, Minister Gaskin referred questions to the previous administration, which had in fact inked the original contract for the airport expansion programme.

He told the media that, “That very contract did specify that the sand to be used must be procured from within a certain radius of the facility, however that was not done for the stone.”
He suggested that the previous administration might not have anticipated CHEC importing stones for the project from overseas, “or they did not think it was a priority.”

APNU/AFC amendment
The Minister’s answers were however challenged by Guyana Times over the fact that the current APNU/AFC administration did in fact amend the contract but he deferred, saying he is unclear as to the scope of the amendments that had been effected.
He opted instead to say, “I don’t want to get into that, I am just saying the main contract was done some time ago and therefore it was clearly not considered and not included in the contract, the effect of that is now taking place.”
He suggested too that despite the current Government having already amended the contract, it was still somehow being blamed for an arrangement that had been put in place by the previous administration.
Asked if the current Government would allow the contract to be fulfilled to the end, Gaskin said, “I don’t think that this particular issue warrants the contract being terminated or anything like that…but certainly as Minister of Business I do feel strongly that wherever possible we should promote our local businesses.”
He did suggest that there is nothing to prevent a re-examination of the issue, “to see why a foreign company was contracted to supply the stone…that will certainly help us to understand what are some of the challenges facing local businesses.”
He spoke directly about the lax capacity of some local operations and queried if local suppliers had been sidelined as a result of pricing constraints as well.
The Business Minister said he does not believe that CHEC would have procured from “outside of Guyana unless it was to their benefit to do so.”He said Government will have to ascertain what the reasons were that caused CHEC to source its building material from overseas so that the administration would be able in future seek to address some of the local hurdles, “faced by our businesses that are perhaps making them less competitive, then we need to look at that also.”
GMSA position
At least two local stone suppliers have since lodged formal complaints with the Guyana Manufacturers and Services Association (GMSA).
This was confirmed by GMSA president, Eon Caesar, who also called for greater protection by government with respect to local manufacturers and suppliers.
CHEC has inked a US$7.5 million contract with Suriname’s state-owned mining company Grassalco, to supply some 300,000 tons of crushed stone over a 12 month period for the CJIA Expansion project—currently being done by CHEC.
Caesar had told Guyana Times that while CHEC is a private company that makes its own decisions with regards to completing its project within its timeframe and specifications, the project is being funded by tax-payers’ dollars and as such it is imperative for Government to do more to protect local content.
Speaking on the complaint lodged by the two local suppliers, Caesar said even if it is a case that one of the companies could not meet the demands with regard to the amount requeired, at least both companies together could have met the quota.
According to International reports, Surinamese Grassalco and Zhong Da International Engineering Company will deliver the material in partnership to the client, China Harbour Engineering Company in Guyana.
The contracts were reportedly signed by Grassalco’s Chief Executive Officer, Sergio Akiemboto; Wu Qiong, General Manager of Zhong Da International Engineering Company; and Sun Wei, project-manager of China Harbour Engineering Company. The Guyana CHECH contract is reportedly the largest contract the state-owned company has signed with a foreign contractor.