The story of three water wells, BK and GWI

– contractor had no experience drilling

A forensic audit report on the state-owned Guyana Water Inc. (GWI) has found worrying problems with the management of several multi-million-dollar contracts by the previous Board of Directors.

Former GWI Chairman, Ramesh Dookhoo

The report, released this week by Government, was prepared by Accountant, HLB R. Seebarran & Co, and focused on period January 2012 to May 2015. The audit was contracted by the Inter-American Development Bank.
There was one particular case of three water wells that is raising eyebrows at the manner the GWI Board, headed by Ramesh Dookoo, bent over backwards to accommodate the contractor. The wells are more than four years overdue.
Three contracts were awarded to BK International to drill wells at Hope, Mon Repos and Eccles.
According to the minutes of the Board of Directors (BoDs) meetings seen by the auditor, the Directors discussed the progress of the well projects awarded to BK International. It was noted since December 20, 2012, that delays of the well projects was a matter of concern.
As a matter of fact, it was found that the three wells were only 10 per cent complete.
It was explained that materials should arrive the next month with contracts awarded since in 2011. The wells should have been completed by August 2012.
The auditor noted that contracts were in liquidated damages.
“It was suggested that the evaluation criteria should be reviewed so that the evaluation committee can be aware of all other works being undertaken by a bidder. It was suggested that GWI should develop its well drilling capacity internally, however it was indicated that this would not be feasible at this time and that the focus is on well maintenance. Disappointment was expressed at the delays in completing these projects and the effect on the customers not being able to get a service.”
A few weeks later, on January 31, 2013 there was another meeting. BK Int’l indicated that critical parts have arrived with the rest due in two weeks.

Nothing Doing

Four years overdue: The state of play with the three wells.

Records from the Board suggested that a final warning letter be sent to BK Int’l on this matter.
By February 28, the parts had arrived with BK submitting a revised work programme.
Five months later, at its 112th meeting on July 4, 2013, the Board was asked to consider extending the contracts awarded to BK Int’l to the end of the year.
“It was explained that the liquidated damages period has expired and that it would not be feasible to terminate the contracts now. It was agreed that the contracts can be extended but a meeting must be held with Mr. Brian Tiwarie (Managing Director).”
At another meeting three weeks later, the Board learnt that while the Eccles well was progressing, works on the one at Hope had stalled because an object was stuck in the well.
“A meeting was held with the contractor and the situation appeared hopeless. An attempt would be made with a crane to remove the object failing which the contractor will be approached to drill another well,” the forensic audit report disclosed.
A few months later, on September 5, 2013, another meeting was held. There was “good progress” at Eccles.
On March 27, 2014 – a Board member is on record querying why none of the wells was completed.
“It was suggested that GWI move to the next level and terminate. It was noted that there isn’t anyone else to do the work and the company is working along with the contractor to complete the wells.”

Brian Tiwarie

According to an October 30, 2014 meeting, a well inspection report by GWI at the Mon Repos site showed that the screen collapsed possibly due to poor development of the well.

“…The contractor moved from the location and proceeded to Eccles well site without GWI authorization. He was written on this matter.”
For the rest of the year, records of Board meetings suggested that there were problems.
The audit report then concentrated on a BoD meeting on April 30, 2015 where the subject of the Mon Repos well came up- “Nothing much has been done in the last month since the contractor has been focusing on Hope…the well at Eccles is producing and is in operation– more developing has to be done.”
The auditor was critical in noting that the contracts for the wells were awarded to BK International in 2011 and were to be completed in August, 2012.

Bending Backwards
“These contracts have not been completed to date and the contractor has not been faced with any penalties. The problem with these contracts was that the BOD procrastinated and allowed the contractor to determine when the contracts would be finished.
In addition, the delays, time spent by management and cost to resolve issues with the contractor has compromised the BOD as can be seen from the extracts of the Board minutes above.”
Further, the auditors said, stakeholders who were hoping for improved water service continue to wait.
The contracts have not been completed as there are still major components and works to be done to complete the wells.
In response to the auditor’s notes, GWI’s management insisted that the contracts were awarded by the National Procurement and Tender Administrative Board based on their evaluation of a contractor that had no experience in well drilling.
“These contracts were consistently discussed at the level of the GWI Board and there has been consistent agreement to allow the contractor to complete the three wells.”
GWI said it penalized BK the maximum liquidated damages which is 10% of the value of works for each of the contracts to the total value of $18.6 million for the three contracts.
“At present the respective status of the contracts for which one well (Hope) is completed, the contractor has been issued an ultimatum to complete remedial and development works on Eccles by April 30, 2016 and they are required to recommence drilling of a replacement well for Mon Repos by April 30, 2016 or the contract will be terminated and legal actions taken against the contractor.”