A decision by the National Infrastructure Development Company Limited (Nidco) to cancel a contract for the Solomon Hochoy Highway extension project with Brazilian construction firm Constructora OAS SA is set to cost the State almost $1 billion.
Delivering a decision on a partial final award on April 16, arbitrators John Fellas, Adam Constable, QC and Andrew White, QC, of the London Court of International Arbitration, upheld Constructora OAS’s arbitration claim against Nidco and ordered US$126.3 million (approx TT$852 million) in compensation.
In the 223-page ruling, obtained by Guardian Media, the arbitration panel ruled that Nidco was wrong to have terminated the contract based on the two main grounds it claimed.
In the arbitration proceedings, Nidco claimed that Constructora OAS effectively abandoned the project in late 2015 after it slowed down work, dismissed most of its staff and became insolvent by letting debt accumulate to suppliers and contracts.
The company denied any wrongdoing, as it claimed that the issues raised by Nidco were due to the fact that it (Nidco) failed to make a major interim payment under the contract. It claimed that at the time of the termination, it had injected a further US$31 million into the project and had renewed its performance and retention bonds.
In upholding Constructora OAS’ case, the arbitration tribunal ordered that it be paid US$127,072,326 in damages minus the US$706,426.70 offset granted to Nidco.
The damages represent the company’s claims for performance and retention securities, a series of unpaid interim payment certificates (IPCs), materials in stock, temporary works and contracting equipment.
The compensation to be paid to the company can still rise, as the arbitration panel requested further submissions from the parties on whether the damages awarded could attract interest.
The tribunal also has to consider the company’s claim for additional damages on the grounds that Nidco was overpaid when it seized the bonds in connection with the advance payment deductions. It stated that it denied all other claims, counterclaims, claims for offsets and defences.
The outcome of the arbitration proceedings was raised by Opposition MP Dr Roodal Moonilal last week, while he was making his contribution to a motion to adopt a report of the Standing Finance Committee in Parliament.
Moonilal claimed that the Government was deliberately concealing the development from the public.
In early 2011, Constructora OAS was awarded the contract for the project, which was then estimated to cost approximately $5.3 billion. After the contract was terminated, the project was put on hold for several years before being restarted with local contractors.
In August last year, Nidco announced that the project was three-quarters complete. However, several months later, a segment of the highway at Mosquito Creek collapsed.
In July 2019, Cabinet announced a Commission of Enquiry to investigate aspects of the project, including whether a ministerial oversight committee under the former People’s Partnership government had fulfilled its mandate.
The committee was headed by former prime minister and current Opposition leader Kamla Persad-Bissessar and included several former members of her Cabinet, including Moonilal.
The commission, which is yet to start its work, is to be chaired by retired judge Sebastian Ventour, with attorney Gregory Delzin serving as commissioner.