Last update: 12-Dec-2013 8:49 pm
Thursday, December 12, 2013
Trinidad & Tobago Guardian Online
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Govt owes $1b for land development
The Government has incurred a debt of more than $1 billion to local contractors with more than 50 per cent of that cost being owed to contractors working on lands being developed for residents who will be displaced by the construction of the San Fernando to Point Fortin Highway. For more than a year, the Estate Management and Business Development Company (EMBD) has not paid contractors developing lands at Petit Morne, Ste Madeleine and Cedar Hill, Princes Town, which will be allocated to residents living along the path of the controversial $7.2 billion highway project and ex-Caroni workers. And the figure is likely to increase because of cost overruns and delays on the project. Outstanding debts are just a few of the issues plaguing the EMBD sites as allegations of shoddy work and inflated claims are expected to increase the cost of the project. In a telephone interview with the T&T Guardian, Housing Minister Roodal Moonilal admitted that the Government was owing the contractors over $1 billion. Already, he said, the Government had forked out $250 million in the last eight months to pay off contractors, with the contractors at the Petit Morne development still being owed $300 million for that project alone.
However, he said a probe is under way into payment claims by some contractors, which he described as scandalous. “When I took over the ministry over the EMBD, there were bills there for us that were over $1 billion,” he said. “The Cabinet was not comfortable with the governance arrangement set up before and if we were to pay, it would be a scandalous sum of money to contractors, whereby to develop a lot of land was $600,000 per lot and we had serious concerns about the internal procedures that generated those types of prices.” Lenny Sookram, project manager for Namalco Construction Services, one of the contractors at the site, confirmed his company had not been paid for its work for the past 15 months. Namalco, he said, also undertook work at Picton I, Barrackpore and Roopsingh II at Waterloo, with all three sites totalling 2,500 lots which are yet to be given out to prospective residents. He said they have submitted over 15 certificates of payment but none have been paid to date. Other contractors at the site, LCB Contractor, and the engineering consultant firm, BBFL Civil Limited, have also not been paid. Namalco is responsible for the development of Petit Morne II and Petit Morne IIA, the latter of which is being developed for relocated residents from the highway project. Sookram said non-payment has led to the suspension of work on several occasions, which they are entitled to do under their contract with the EMBD. However, he said they are allowed to make claims for extra time spent on the project.
Sookram said large sums are owed to them and the non-payment for work is threatening to cripple the company. He did not want disclose the sum of money, but said the fee runs into hundreds of millions. “We have worked and have not been paid for over a year now. Under the contract we are entitled to suspend work or take action when we have situations like this but notwithstanding those actions the employer has asked us to continue to work in good faith while they arrange money and payment,” he said. “We continue to work in good faith and here we are today one year to 15 months down the road without payment and not only on this job, we have two other projects with the EMBD that we suffer the same situation.” “From time to time we get small amounts of money but nothing significant. They said funding was the keep back.” “From time to time, under the contract, we asked these questions of the employer, whether they have the funding for the job and to date they are unable to really answer so we are just clueless.” Sookram said the company had taken out loans to finance the project, but because the non payment by the EMBD they are being pressured by their financiers.
A letter obtained by the T&T Guardian, dated December 19, 2012, showed that former EMBD chief executive officer Seebalack Singh wrote to Republic Bank Limited’s supervisor Kamalaya Hoyte clarifying that Namalco was awarded a contract worth $76.5 million for Petit Morne II. It also stated that the project had been extended to include Petit Morne IIA. “No Invoices have been paid on this project to date,” the letter stated. In another letter dated October 2, 2012, to BBFL Civil Limited, Singh requested that Namalco and LCB Contractors continue to work at full capacity as they attempted to honour payments. “We also request that the contractors continue to work at full capacity and not make any claim as stated in their letters dated 8th August, 3rd and 28th September, 2012,” he said. “We have always met our commitments in the past and would prefer a relationship such that the contractors not use every opportunity to make claims against the client.” However, Sookram said with its financing incurring interest charges, the replacement of unsuitable material at the site meant Namalco had also incurred a debt.
Worker being thrown on the breadline
More than 250 workers at Namalco were thrown onto the breadline as a result of the non-payment and Sookram said soon they will be forced to retrench more workers as funds are running low.
“We estimate that over 200 people so far have been laid off as a result of the slow work or suspended work,” he said. “Every month we have to make an assessment and at the end of each month we continue to downsize. Pretty soon we estimate we will be down to a very minimal staff if the situation does not improve.”
Lots completed but distribution delayed
Sookram added that Namalco had already completed 149 lots for the relocation of residents displaced by the highway and that they were ready to hand over the lands to the EMBD. He said water and sewage fixtures were already in place and it was only for T&TEC and WASA to make the necessary connections. “Everything contractually on our part is completed, tested and approved and it is ready for hand over, all that is outstanding is the public utilities,” he said. “As early as in the morning, you can start to relocate the residents here, 149, immediately, right away.” He, however, questioned why T&TEC ommitted Phase II A which is completed, but installed electrical fixture at Phase IIIA where work has only reached 40 per cent.
Project finance frozen as Govt probes $600,000 a lot claim
Moonilal said contractors will be paid soon, but in small amounts as their claims are being verified. “What we have done is we have frozen the project...We are paying contractors small amounts as we review the internal system and as we validate and verify claims by contractors,” he said. “We have a consultant at this time validating claims by contractors. It was this same problem I had face at Udecott when I came into Government. “In our books, we cannot understand a lot of land being developed for over $600,000 so that we are working with contractors now to verify their claims.” According to Nidco, residents will be entitled to purchase a 5,000 square-foot plot at a highly subsidised price of $50,000. “I have now gone to Cabinet and Cabinet has approved some funding for all the contractors at that site and all the contractors there can expect in a few days some payment but certainly not in the vicinity that they have asked for,” Moonilal said. “They claim over $300 million which we are seeking to verify, but we will pay to contractors about $70 million to $80 million. “All contractors are receiving monies and payments but in smaller sums than they would like.” “We have paid off, in the last eight months or so, $250 million. That includes about six large contractors and about 50 small contractors. In fact all the small contractors have been paid off. The problem is with the large contractors. We are verifying their claims.”
Botched work causing increased cost
On Wednesday, an expert at the site told the Guardian that work on Phase IIIA being done by LCB was 40 per cent completed and that all the work done thus far has to be verified by BBFL to ensure compliance with the construction codes. However, another expert there accused some contractors of camouflaging the development to give the impression that work is at a more advanced state than it really is. “The roads still have a long way to go so if they said two months, I think they have at least four months into six months.” He added that no geotechnical surveys were done on the site by the EMBD to ascertain whether the land was suitable for housing. Also, he said the EMBD’s initial survey of the land at the tendering stage was “busted” meaning that there were flaws in the initial design. As a result, works are being altered. A multi-million dollar dual carriageway road that has already been constructed has been cancelled, he claimed. Contacted for comment, LCB’s managing direction Jaleel Baksh denied the claim but said he prefered not to comment as his company was focused only on the job at hand.
Moonilal said the quanity surveyor and independent consultant were looking into the allegations. He summed up the allegations as a result of a competitive environment, saying that both contractors at the site were former friends, now engaged in a civil war. “Always with some contractors, you know it is a competitive environment and if one contractor is paid a penny more than the other it will lead to allegations and claims, but it is being handled by an independent consultant,” he said. “There is a contractor feud between LCB and Namalco. There is a civil war at the site between who were friends before. They were bosoms buddies and they have an issue and that has spilled over into the press so my comment is a contractor civil war has spilled over into the press. “From friends who were bosom buddies, we have asked their parents to intervene. I am talking to their fathers to intervene because they have been best friends for like 25 years and then they broke up and that led to allegations and counter allegations.” Moonilal was hopeful that the contractors’ fathers will put an end to the dispute. Contacted for comment, EMBD CEO Kamal Saint said it was company policy that all questions be directed to their corporate communications manager Sunita Gopaul. However, when contact on Thursday, an assistant said she was out of the office. When contacted again on Friday, an assistant said she was in a meeting. Despite leaving contact information, no call was returned.
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