Gov’t sues insurer over US$1.54M guarantee for sacked Amaila road contractor

The government has moved to the court for payment of the US$1.54M guaranteed by the Hand and Hand Insurance Company in the event of the failure of Fip Motilall’s Synergy Holdings Inc to fulfill its contract to construct the Amaila Falls road project.

The Hand-in-Hand Insurance Company is named as the defendant in a suit filed by Attorney General Anil Nandlall, on behalf of the Ministry of Public Works, which has been seeking payment for a year.

Synergy was awarded a contract for the “upgrading of approximately 85 km of existing roadway, the design and construction of approximately 110 km of virgin roadway, the design and construction of two new pontoon crossings at the Essequibo and Kuribrong rivers.” It was also supposed to clear a pathway alongside the road for the installation of transmission lines.

Critics had said that Synergy did not have experience with building such roads and should not have gotten the contract. From the very outset of the start of work there were delays, culminating in government’s termination of the contract on January 12, 2012.

The statement of claim for the matter, which is returnable for February 20, 2013, charges that the insurance company “has failed, refused and or neglected to effect payment,” despite being the guarantor that agreed to give Synergy Holdings a security. It cites the terms of the performance bond, including the guarantee by the company to be responsible for up to US$1,540,000, equivalent to G$318,780,000, upon the first written demanding declaring the contractor to be in default under the contract, and without cavil or argument.

On January 11, 2012, the Works Ministry, through Permanent Secretary Balraj Balram, had demanded the payment of the sum as per the guarantee, but it has not gotten it.

As a result, Nandlall is seeking the payment of the sum, with an interest rate of 6% per year from the date of filing to the date of judgment and at the rate of 4% until fully paid. He is also seeking costs in the sum of $797,137, and such further orders that the court may deem just.

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