BK blames sea defence delays on holdup of tax breaks

- defends ability to handle major contract

Brian Tiwari, Managing Director of BK International, blames the delays in the granting of tax and other concessions for hindering the start of some sea defence projects and he reiterated his company’s ability to manage the large European Union-funded contracts and to complete them by the contract date.

This comes in the wake of recent criticisms by the EU Representative Robert Kopecky. The European Union in a press release on Friday urged the speeding up of major sea defence works that it is financing here and warned that further delays may result in Guyana losing funding.

Brian Tiwari

Speaking to Stabroek News yesterday, Tiwari said he did not believe that there will be need to impose penalties in the contracts for the works and he felt that the cooperation which exists between the European Union and Guyana with regard to funding for critical projects here will not be affected in any way.

The EU, the major financier of sea defence works here, called on contractor BK International to accelerate the works. BK has secured a number of sea defence contracts and is a major player in this sector.

Kopecky said that a certain lack of capacity in managing the large portfolio of the contract and to some extent inadequate provision of resources was the reason that BK had experienced delays over the last two years.

Responding to the EU, Tiwari emphasized that the official date of completion of the project is February 28 next year. “…and we intend to complete this project by that date,” he added.

According to him, the company has already taken the necessary steps to ensure the timely completion of the works and is confident in its ability to perform these tasks. “We are pleased at the inspection carried out by the delegation and are happy at their report that at ‘most’ locations the works were in ‘acceptable’ state allowing for provisional acceptance of the 13 locations inspected,” he said.

BK International, he added, is grateful for what he described as “helpful observations” that were made after the inspections, which he said the company accepted in the spirit of cooperation with the EU.

However, Tiwari noted that the contract is governed by the special condition—Article 31: ‘Tax and Custom Arrangements’ items 1:2.0 2(g) and 3—which provides for the contractor to be granted duty-free concessions for the supply of equipment and plant, and the waiver of all local taxes and duties for materials used. He said that BK International suffered a six-month delay in obtaining the duty-free concessions, which contributed to a delay in the commencement of the project.

“Incidentally, after two years, we are still awaiting the exemption of royalty for sand under this project, which was agreed to by all parties under the addendum to the contract. The EU is aware of this,” he said.

Addressing the concerns over the company’s lack of capacity in managing the large portfolio, Tiwari said BK International has executed in excess of 30 sea defence projects of similar nature funded by international financial institutions and the Government of Guyana over the past 22 years.

“BK International Inc maintains that it has the capacity to handle all of the contracts entered into and this includes management and engineering capacity, financial and equipment resources, and has completed sea defence works in all coastal regions of Guyana,” he said.

Recently, he noted, BK International, with a price of $4 billion, successfully competed against MNO Vervat, International BV, a European construction company whose bid was $12 billion, for the 9th EDF Sea Defences project. “For this particular project, BK’s bid was $8 billion less than the other bidder,” Tiwari noted, while adding that the Government of Guyana and the European Union requested and negotiated a further reduction of over 300,000€, to which BK agreed in the spirit of patriotism. He said that this translated into considerable savings for the Guyanese economy.

Tiwari said BK International Inc has never failed in the delivery of the final product as per contracted designs. He noted that this cannot be said of some international firms contracted in the past.

“For example, the firm Pac-Gelfi Construction Company, which is a large construction company from Italy that did sea defence works during the 7th EDF in Guyana had failures in two regions: at Richmond in Region Two and Greenwich Park in Region Three. There were slippages in excess of 150 metres of sea defences into the ocean. These works were rectified at considerable expense by the Government of Guyana, the details of which are at the Ministry of Finance and the EU is aware of this,” Tiwari said.

He said too that the price per metre paid by the EU for works done from the 7th EDF to the present, has dropped by 50 per cent while the costs for fuel, materials and equipment have risen by approximately 45 per cent. He noted that despite these realities, BK International Inc has maintained a standard price.

Tiwari said that in spite of the constraints in obtaining duty-free waivers and customs clearance, “at the commencement we shall deliver this project on time and to the highest standard as is our norm when we undertake works of this nature.

“We appreciate how critical the protection of the coastland is, in relation to the ingress of the sea and its effects on agriculture and the well-being of the populace. The coming months will demonstrate our commitment, capacity and resolve to successfully complete the project,” said Tiwari.

The statement from the EU came after Kopecky, other EU officials and Government of Guyana officials visited the projects that the EU is funding. The EU carried out inspections of locations for provisional acceptance of work on December 13-14, 2011, where representatives of all parties involved visited work sites at Kitty, Coldingen, Melanie Damishana, Clonbrook, Springlands, Uitvlugt, Orangestein, Aurora, Onderneeming, Lima, Walton Court, Johann Cecelia and Zeelandia.

“While the works at most locations were in acceptable state allowing for provisional acceptance, at some locations the works could not be taken over, which could result in enforcement of liquidated damages,” the EU statement said.

The EU said it was encouraging its Guyanese partners “both from public and private sectors, to do the utmost to ensure (an) immediate acceleration of the works, otherwise there is a risk of loss of considerable amounts of funds.”

Some of the EU funding’s recent activities here encompass the construction of 1.6 km of sea defence in the areas of Clonbrook and Springlands, rehabilitation, upgrading and maintenance of 18 km of sea defence in 31 locations, provision of supervisory services, procurement of supplies for the Work Services Group in the Ministry of Public Works and technical assistance to this group.

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